A report by the European Federation of Accountants (FEE), with the backing of the European Commission, found that a tenth of all VAT is not being collected by Brussels, The Independent reported.

Recently the EC said such were the levels of VAT fraud that legitimate trade was being jeopardised and competition distorted.

Some say the FEE estimate may be lower than the actual number as detection rates are not known.

Among the worst scams is carousel fraud (also called missing-trader fraud) where fraudsters form a ring of companies and make dishonest claims for VAT refunds before vanishing.