A breakdown of trade figures from the Central Statistics Office (CSO) indicates that up to 40% - or some Ђ3.5 billion - of the fall in exports during the first five months of the year was due to the ending of VAT fraud schemes, writes Cliff Taylor, Economics Editor
These schemes involved goods being imported into the Republic from Britain and then re-exported to Britain. This was part of a chain of transactions designed to allow the goods to be imported VAT free into Britain. They were then sold at the VAT-inclusive price.
This so-called "carousel" fraud sometimes involved multiple exporting and importing to build up a string of bogus VAT claims.
It is believed to have inflated imports from exports to Britain for a number of years up to 2002. A crackdown on the schemes last year appears to have closed many of them down, which has contributed to a massive fall in recorded trade between Britain and the Republic this year.
