British taxpayer’s money helped fund al-Qaeda and Osama bin Laden

A network or British Asian gangsters based across the UK - said to have links to the 7/7 London bombings in which 52 people died - reportedly mounted VAT and benefit fraud against the Treasury.

Over two decades the gang, who operated in London, Buckinghamshire, Birmingham, Northwest England and Scotland, bagged around £8billion of the public's money, an investigation by The Sunday Times revealed.

Part of the colossal sum also came from mortgage and credit card fraud that targeted banks and individuals, the newspaper reports.

The fraudsters allegedly sent 1 per cent of the netted cash - worth £80million - to al-Qaeda in Pakistan and Afghanistan.

It is understood the cash was used by the terror group to fund training camps, extremist educational programmes and other terrorist activities.

Top secret intelligence documents held by MI5 are said to show that some of the money reached Osama bin Laden's compound in Pakistan before he was killed by US special forces in 2011.

TERROR TAX SCAM

Details of the amount extracted from the British taxpayer came from HM Revenue and Customs (HMRC) and Special Branch, which investigated the gang over 20 years.

Some information was discovered on a discarded laptop found in Afghanistan by CIA and MI6 officers hunting for bin Laden in 2001.

HMRC investigations also found links between the gang and 7/7 bombing terrorist Shehzad Tanweer two years before the 2005 attack.

British authorities were first alerted to the the network's activities in 1995.

According to secret police reports at the time an informant said money was placed in bank accounts under false names before being sent out of the country "for terrorist or drugs purposes".

The informant said: "Asian customers are coming in with carrier bags full of cash on a regular basis."

'LACK OF INTELLIGENCE SHARING STOPPED PROSECUTIONS'

Despite the findings, one customs officer told The Sunday Times he was prevented from sharing intelligence with MI5 because HMRC wanted to maintain confidentiality of the terror suspects' tax records.

He claimed information sharing could have led to prosecutions that would have taken the gang out of operation.

A source close to the matter told the paper: "HMRC had no concept of big-picture thinking.

"Post 9/11 it had no information exchange with the Security Service [MI5] and the Secret Intelligence Service [MI6].

"Then, even when in place, this was overridden by the rules that tax files are sacrosanct.

“HMRC still has no concept as to how it should operate as an agency alongside the intelligence agencies in protecting the nation and its interests.”

Meg Hillier, chairwoman of the public accounts committee, said she is considering launching a parliamentary inquiry into the fraud.

She told the newspaper: "Taxpayer confidentiality is important but where individuals are evading tax to seek to do us harm, then the appropriate agencies should be told.

“HMRC routinely shares information with other agencies so I find it extraordinary that they did not do so in this case.”

But a spokesman for HMRC dismissed the claims that it does not share information in terror cases.