An unexpected surge in trade between the United Arab Emirates and the United Kingdom spurred authorities to initiate an investigation which uncovered billions in losses for the UK government.
Statistics showed that Dubai re-exports increased from $15.5 billion in 2004 to $21.5 billion in 2005 a 38 per cent year-on-year growth.
Value added tax (VAT) experts and UK customs officials maintain that a system was used in many instances which lets a company pocket the VAT after resale, according to Gulf News.
Several raids uncovered the scams, reported by the Sunday Telegraph, leading to the arrest of 22 individuals.
"What we noticed last summer is that there seemed to be a mutation in the fraud to third countries," said the senior press officer at Her Majesty's Revenue and Customs, Sandra McKay.
"There was an increase in trade without any economic explanation," she explained.
