What is trade fraud?
In the UK context, trade fraud generally refers to dishonest or deceptive activities carried out in connection with buying, selling, importing, exporting, or financing goods and services. The aim is usually to gain money, avoid taxes or duties, obtain goods unlawfully, or deceive businesses, banks, or government authorities.
Common examples include:
- Invoice fraud – creating false invoices or altering genuine ones to obtain payments.
- Customs fraud – misdeclaring the value, quantity, origin, or type of imported/exported goods to reduce customs duties or taxes.
- Carousel (VAT) fraud – exploiting VAT rules through a chain of transactions to claim VAT refunds dishonestly.
- Trade-based money laundering – disguising the movement of illicit funds through manipulated trade transactions, such as over-invoicing or under-invoicing goods.
- Counterfeit goods trading – selling fake products while claiming they are genuine.
- Advance payment scams – taking payment for goods or services that are never delivered.
- Document fraud – using forged bills of lading, certificates of origin, or other trade documents.
In the UK, trade fraud can be investigated by organizations such as HM Revenue & Customs, National Crime Agency, and the Serious Fraud Office, depending on the nature and scale of the offence.
Penalties can include:
- Fines
- Repayment of unpaid taxes or duties
- Confiscation of assets
- Criminal prosecution
- Imprisonment in serious cases
Last Update:
June 8, 2026
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