VAT crackdown gets private help

Customs & Excise has hired private-sector accountants to crack down on VAT avoidance.

The use of accountancy firms follows the loss of an estimated #2bn last year through more effective tax planning by companies seeking to minimise their VAT burdens.

Customs chairwoman Valerie Strachan told the Public Accounts Committee: ‘We have brought in a few private-sector accountants with experience on the other side of the fence to help us.’

A Customs spokeswoman said four VAT staff, lured by private-sector salaries, had been brought in as part of the spend-to-save policy. She said: ‘We have recruited some people that used to work for Big Five firms and other international organisations.’ She added that the recruitment policy is expected to continue but declined to give an idea of the extra amount.

The crackdown was revealed in a PAC report in which MPs recorded the increased attention being given to curbing avoidance through staff training to spot schemes ‘and through the use of private-sector expertise on tax planning’.

The committee concluded: ‘While traders have a legitimate concern not to pay more tax than they should, we would encourage the department to redouble its efforts against all artificial attempts to minimise tax liability.’

The committee also called on Customs to be ‘more ambitious’ in slashing the avoidance bill than its proposed target of #100m to #125m of revenue protected through anti-avoidance measures.

It also urged Customs to ‘pursue all debt rigorously, whether or not written off’, and challenged whether large taxpayers are being given too much leeway over payment on time.

Customs said it could not be more accurate in assessing the amount of VAT to be collected without making paperwork more complicated and imposing unacceptable burdens on business.

It added that it was difficult to distinguish between legitimate tax planning and artificial avoidance activity.

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