EC clears UK to fight carousel fraud
European Commission grants UK permission to apply VAT derogation
UK tax and crime-fighting authorities have received a major boost in their
ongoing struggle against carousel fraudsters after the European Commission
granted the UK permission to change the way it charged VAT.
The EC granted the UK permission to apply a reverse charge to goods known to
be traded fraudulently.
The UK has been lobbying for the change for sometime, as it believes that the
new way of charging VAT will see a reduction in Carousel fraud.
Carousel fraud has been estimated to cost the UK taxpayer £8.4bn a year, and
industry experts believe that the extent of the fraud is forcing authorities to
tax citizens and companies more heavily.
Commentators welcomed the EC’s decision, but expressed caution over how
successful the measure would be in practice.
‘Today’s news that the European Commission has granted the UK permission to
apply a reverse charge to goods known to be traded fraudulently is very welcome.
However, as the derogation is specific to certain goods, traders will simply
move to other small, high-value commodities,’ said George Bull, Baker Tilly’s
head of tax.
Bull said HM Revenue & Customs would have to invest more resources in
fighting carousel fraud as this was the only way to clamp down on the activity
effectively.