LONDON, (Reuters) – The British tax office arrested  seven people in London on Wednesday in a suspected 38 million  pounds ($62.6 million) value-added tax fraud in the European  market in carbon allowances, it said.

Officers from HM Revenues and Customs (HMRC) searched 27  properties around London and arrested six men and one woman in  early morning raids, the HMRC said in a statement. “Those arrested are believed to be part of an organised  crime group operating a network of companies trading large  volumes of high-value carbon credits,” it said.

“It is thought that the proceeds of this crime have then  been used to finance lavish lifestyles and the purchase of  prestige vehicles.” The HMRC said further arrests were likely but it could not  give the names of those arrested or the companies involved, nor  could it estimate the total scale of the suspected fraud or say  if it was isolated to Britain.

Under the $90 billion European Union carbon emissions  trading market, companies trade permits called EU Allowances  that allow them to emit climate-warming greenhouse gases.

Britain said last month it would make carbon trading exempt  from value-added tax (VAT) in response to a suspected trading  scam called carousel fraud.

Through carousel fraud, also called missing trader fraud,  fraudsters import goods VAT-free from other countries, then sell  the goods to domestic buyers, charging them VAT. The sellers  then disappear without paying the tax to the government.