HM Revenue & Customs has applied to the European Commission to be able to
deal with VAT on certain goods in a new way to prevent the huge leakage of tax
from carousel fraud.
The government wants to be removed from the demands of the Sixth Directive on
VAT to enable it to introduce a reverse charge procedure for transactions
between certain businesses in certain goods.
‘The government is committed to working closely with the business community
to minimise the impact of these proposed changes on legitimate traders,’ the
Paymaster general Dawn Primarolo said: ‘The government is fully committed to
tackling MTIC fraud and is utilising all available measures to tackle this
fraud. This organised, criminal attack on the tax system leads to significant
‘The introduction of the reverse charge is one of many measures designed to
thwart MTIC fraud by taking the criminal profit out of the transactions. The
reverse charge is an important tool in tackling this fraud as it removes the
opportunity for criminals to steal VAT. However, the government will continue to
monitor very closely those that carry out this fraud and will not hesitate to
act to prevent any further threats to the tax system.
‘MTIC is not a phenomenon unique to the UK but also affects other European
Union Member States and we continue to work closely with our European partners.
‘I hope that the Commission and other Member States will look favourably on
our request, and that the UK can implement the proposed changes as soon as
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