VAT changes needed to combat carousel fraud
Summary
Missing Trader Intra-Community Fraud, also known as
'carousel fraud' (where goods are repeatedly exported and imported within the
European Union (EU)), has caused a considerable loss of revenue.
It is
estimated that the UK lost between £3-4.75 billion in 2005-06.
This Report
'Stopping
the Carousel: Missing Trader Fraud in the EU' (HL 101), from the House of
Lords European Union Committee, looks at some of the measures that have been
taken to recoup some of this money, as well as measures to stop fraud
occurring.
In addition, it considers whether the Government's policies
have imposed an unreasonable burden upon legitimate businesses within affected
sectors.
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How does it affect me?
If you are a trader or have been the victim of Missing Trader
Intra-Community VAT fraud, this may be of interest.
The Report concludes
that existing measures are unsustainable and that steps need to be taken to
ensure innocent traders are not damaged.
The government needs to work
with member states to implement a system of taxation of intra-community
transactions that will be less vulnerable to major fraud.
Baroness Cohen
of Pimlico, Chair of the Committee, said: "Missing trader and carousel fraud
are major concerns for EU member states. The scale of the attack in the UK
alone was estimated at £4.75bn in 2005/06: this is money which criminals are
taking which could be used to fund schools, hospitals and other infrastructure.
"We feel the time is now right for a more innovative solution to this
problem. That could be best achieved with a Europe wide consensus on how to
move forward and we call on HM Treasury to consider further a change in the way
that VAT is charged on cross-border trades. We noted that the flat rate origin
system seems well worth further examination."
Find out more about the work of
the
European
Union Committee.
See more on the
impact of
Missing Trader Intra-Community (MTIC) VAT fraud on UK trade on the National
Statistics website.