Treasury finally secures reverse charge VAT

After months of delays and frantic lobbying the UK has finally secured
EU approval for
introducing reverse charge VAT, a major boost in the battle against carousel

The new rule will apply to mobile phones and computer chips from 1 June 2007,
as these are the main goods used in carousel fraud chains, which cost the
government about £4bn annually.

‘We are targeting the measure at the goods most commonly used in the fraud.
This is a proportionate step to safeguard taxpayers’ money, and means that
businesses can trade in these goods without the risk of getting caught up in the
fraud,’ paymaster general,
Dawn Primarolo

The Government has committed 700 additional staff, and now uses over 1500
staff to identify and tackle the fraud and those involved in it.

In recent months HM
Revenue & Customs
 has focused efforts on denying the
fraudsters access to the proceeds of their crimes, including through checking
VAT repayment claims from those trading in supply chains associated with the

The clock will now start ticking for accounting software providers to upgrade
their packages to accommodate the new VAT structure.

Further reading:

Read the Treasury statement

France delays Brown’s VAT fraud move

Carousel fraud bill to reach £5bn

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