MTIC fraud sees VAT receipts plummet
Carousel fraud blamed as government suffers first fall in VAT revenues since 1973
The government has suffered its first annual fall in VAT tax revenues for 33
years, data released yesterday revealed. Carousel fraud scams have been blamed
for the drop.
According to official figures, VAT revenues plunged 14% in March this year
compared with the same month last year. Over the full year, VAT takings were
0.2% down at £72.9bn, The Guardian reports.
The fall is particularly alarming given the healthy state of the economy. In
the 1970s two recessions failed to dent VAT revenues.
The new numbers suggest that government has underestimated the effect of
carousel fraud, after forecasting that losses from fraud were less than £2bn per
year. The figures also throw doubt over Gordon Brown’s forecast that VAT
revenues would be up by £800m for the 2005/2006 financial year.