VAT rise to trigger return of carousel fraud

THE RISE in VAT to 20% could see a huge jump in carousel fraud in the UK, as the hike makes the criminal activity more lucrative.

Carousel fraud – where a business buys products VAT-free in one country, sells them in another and disappears before paying the VAT owed – had died down in the UK recently, as higher rates other countries had made it more profitable to commit the fraud there.

However, today’s rise in VAT to 20% from 17.5% may see many fraudsters returning to the UK and could double the amount of VAT fraud to £4bn this year, said McGrigors partner Jason Collins in The Times.

The 20% rate puts the UK ahead of other countries such as the Netherlands and Germany, where VAT is 19% and where much of the fraudulent activity had moved to.

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