France delays Brown's VAT fraud move

The plans of the UK Treasury to introduce a 'reverse charge' VAT regime to combat rampant carousel fraud have been held up by France.

Chancellor Gordon Brown was hoping to change the way VAT was charged on certain items, such as computer chips and mobile phones, in order to reduce the £3bn the fraud is costing the government.

The plans, however, require the approval of the European finance ministers, and France has so far refused to allow the UK to go ahead with its plans.

Less than a month ago Brown said he had brokered a deal on VAT with France, but according to the FT the French are still holding up plans to introduce reverse charge VAT in the UK.

UK Treasury officials told the FT that France had raised 'technical issues' over reverse charge VAT.

In December Brown told parliament that France had agreed to allow the UK to go ahead with the change. It is believed that he had personal assurances from French finance minister Thierry Breton that the scheme would go ahead

'Paris has raised technical issues relating to the operation of the scheme which were not "live" when MR Brown made his announcement to parliament in London,' a Treasury spokesman said.

Further reading:

UK wins backing from France in carousel fraud battle

Britain's carousel fraud battle suffers European blow

Carousel fraud bill to reach £5bn