The Channel logo

News

By | Kelly Fiveash 19th March 2007 16:42

HMRC gets new tool to battle VAT fraud

'Reverse charge' gets green light

Computer chips and mobile phones will be subjected to a "reverse charge" VAT regime from June 1 this year in a bid to slash missing trader fraud.

Her Majesty's Revenue and Customs (HMRC) said the reverse charge system should remove the ability "to steal VAT on business-to-business transactions", effectively preventing Missing Trader Intra-Community (MTIC) fraud - or "carousel fraud" as it is more commonly known - on certain goods.

The bypassing of VAT payments when trading in small goods such as mobile phones and computer chips cost the British taxpayer an estimated £3bn last year, according to figures from HMRC.

Under the reverse charge scheme, VAT will only be accounted for at the end of the supply chain, removing the opportunity for fraudsters to scam the revenue.

HMRC spokesperson Sandra McKay told the Reg that a combination of "improved intelligence alongside more staff committed to combating VAT fraud" has led to a downturn in such illegal trading in recent months.

However she said she was unable to speculate whether other goods could now be targeted by VAT fraudsters given that the reverse charge measures apply only to mobile phones and computer chips.

Paymaster General, Dawn Primarolo MP said: "The government remains determined to tackle this fraud and the criminals perpetrating it, and we are committed to working closely with our European and other international partners to combat this serious threat to the EU VAT system." ®

alert Send corrections

Opinion

Woman cuddles 'sly-looking' Fennec fox. Photo by Shutterstock
Cartoon of employee asking wky boss makes hium wear suspenders (while pincer through open trapdoor remains poised above his head) illustration by Cartoon resource for Shutterstock

Frank Jennings

It's not like my boss painstakingly nurtured the contacts, right?

Features

Girl and computer, photo via Shutterstock
Middle-class terror of engineering also part of problem
Nerd fail photo via Shutterstock
Shouting match
Single market vs. rest of the world