TaxAdministrationCustoms in drive to recover £10bn in lost VAT

Customs in drive to recover £10bn in lost VAT

Customs have recruited 'highly specialised anti-avoidance experts' in a bid to reduce between £7bn and £10bn the amount of revenue missing from VAT.

Link: Government launches major VAT offensive

The early move towards the new strategy designed to crackdown on VAT errors, avoidance and evasion – particularly missing traders – was revealed in its annual report for 2001/2002.

The new staff, with ‘proven ability to identify and shut down legislative loopholes and abusive tax avoidance schemes’, will face a confrontation with the profession’s ethos that taxpayers are entitled to use all legal means to reduce liabilities.

The report said that in future all new VAT legislation will have ‘a specific avoidance impact assessment explaining the elements included to prevent avoidance and the steps taken to make the legislation avoidance-proof’.

The strategy – which has already been announced – replicates successful measures to crack down on tobacco and alcohol smuggling and includes the deployment of 1,000 staff to enhance existing efforts in key problem areas.

Chairman Richard Broadbent – whose salary was increased by an inflation-busting rise of around 9% to between £125,000 and £130,000 – said VAT assurance work identified a £2.5bn additional liability, a 5% increase on 2000/2001.

He said: ‘The scale of sustained performance improvement underlying these activities should not be underestimated.’

Broadbent revealed for the first time that ‘integrity and probity’ were central to the events leading to the abandonment of London City Bond court cases following massive revenue losses from the diversion of untaxed alcohol intended for export on the domestic market. The diverstion was permitted by investigators in a failed bit to prosecute perpetrators.

The affair is subject to a second judicial inquiry.

He said the report of Sir John Bourn, comptroller and auditor general, confirmed, however, ‘the overall adequacy of our systems and procedures’.

Broadbent’s review of the year confirmed there is increasing liaison and co-operation with the Inland Revenue, including joint consultation and case-specific exchanges of information with the Special Compliance Office, an increase to 20 in the number of joint shadow economy teams (two covering the fashion industry), 14 joint teams covering the UK’s 14 largest businesses, a joint data warehouse and a joint unit for businesses in financial difficulty.

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