While VAT receipts came in at almost £64bn in 2002-03, an estimated £11bn fell through the net, according to C&E estimates by the C&E.
‘Customs needs to take advantage of the merger with the Inland Revenue to improve data matching in order to identify traders in the shadow economy,’ said Edward Leigh MP, chairman of the Committee of Public Accounts.
Leigh spoke as the committee reported on the scale of VAT losses through fraud error; preventing and detecting fraud and other non-compliance; and investigating and dealing with fraudsters.
The report found that the Treasury and new combined revenue department, to be known as Her Majesty’s Revenue and Customs, should ‘bring forward legislation to allow best use of information in the new department’.
The new department should also work towards a better exchange of data information on traders between other EU member states, an area that is ‘particularly important in tackling missing trader fraud’.
Mandatory electronic-filing of VAT returns is also being considered as a method to further reduce administrative costs. The new CIO for the combined department is expected to be unveiled on 1 September.
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