Economic secretary John Healey laid down a series of safeguard measures surrounding the new draconian powers which give Customs the right to seize VAT from other businesses in a supply chain, where missing trader fraud is uncovered.
He said formal warnings would have to be issued before Customs could demand security deposits from other businesses in the chain and promised businesses, which comply with ‘robust guidelines’ for checking the integrity of customers, suppliers or supplies will not be forced to pay the missing VAT.
Healey gave the undertakings during heated debates on new clauses spelling out the powers which have come under sustained attack from the ICAEW other professional bodies.
And he claimed provision for appeals means the new powers comply with the European Convention on Human Rights.
Speaking in the Commons Finance Bill Committee debating details of the Budget proposals, Healey said the powers were essential to deal with missing trader fraud costing the Treasury a ‘massive’ £1.7bn to £2.7bn a year.
He said one case alone involved £160m of ‘stolen’ VAT and said that in another, involving £30m and a network of companies in Spain, the Irish Republic and the UK, one of those convicted was sentenced to nine years in prison (the longest sentence ever for VAT fraud). A solicitor received five years in jail for laundering £8m of the proceeds.
Healey said the scam involved buying in a large consignment of high-value, low volume goods, such a mobile phones, VAT-free from another EU member state, and selling them on at a VAT-inclusive price and disappearing without paying the VAT.
He agreed the powers sought were significant but claimed: ‘We are dealing with serious fraud organised on an almost unprecedented scale.’
Healey pledged that the new power to demand a deposit ‘will be invoked only when a warning has been given’.
Despite opposition from the Tories and Liberal Democrats, the clauses were pushed through with the government’s built-in majority of 10.
The London School of Business & Finance has become the official provider of ACCA tuition materials for the PwC CEE Academy
Leonard Curtis Business Solutions Group has opened a new office in Glasgow – the first Scottish office for the professional services provider
The average cost of fraud increased 35.4% to £3.9m in 2016, compared to 2015 data
Harrison Beale & Owen will (HB&O) have a new chairman and managing director at the helm for 2017