While VAT receipts reached almost £64bn in 2002-03, an estimated £11bn fell through the net, according estimates by Customs.
‘Customs needs to take advantage of the merger with the Revenue to improve data matching to identify traders in the shadow economy,’ said Edward Leigh MP, chairman of the Public Accounts Committee.
Leigh spoke as the committee reported on the scale of VAT losses through fraud error, the prevention and detection of fraud and other non-compliance, and the investigation and prosecution of fraudsters.
The report stressed that the merged departments should ‘bring forward legislation to allow best use of information in the new department’.
The new department should also look towards a better exchange of information on traders between other EU member states, an area that is ‘particularly important in tackling missing trader fraud’.
The report said: ‘Customs should work closely with the European Commission in devising the proposed new EU-wide VAT information exchange system to address inaccuracies and delays in exchanging data.’
Mandatory electronic filing of VAT returns is also being considered in Whitehall as a method to further reduce administrative costs.
‘Traders paying over the correct VAT, and the taxpayer in general, will want to see Customs step up its efforts to tackle these losses,’ said Leigh.
The new chief information officer for the combined department is expected to be named on 1 September, and will work closely with IT services company Capgemini on the department’s computer systems.
The appointment is expected to come from outside the civil service, following the recent appointments of Department for Work and Pensions’ CIO Joe Harley from ICI, and fromer Accenture chief Ian Watmore as head of e-government.
The executive board in charge of the recruitment process includes David Varney, the current chairman of mobile-phone giant mmO2, who has been appointed executive chairman of the soon-to-be merged department.
Baroness Prashar, the first civil-service commissioner, will chair the recruitment board. Other members will be Revenue chairman Ann Chant, Customs acting chairman Mike Eland and DwP non-exec John Cross.
Capgemini has taken charge of 73,000 desktops, 200 systems, 20 ICL mainframes, and 177 IBM and HP Unix servers. Accenture will continue to run the NIRS2 national insurance system until early next year, at which time it is expected to become part of the Aspire contract.
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