Thursday, December 14, 2006

Agreement with France on combatting VAT fraud

From the FT:

On Wednesday Gordon Brown said British and French officials had agreed that the UK could introduce a “reverse-charge” system of VAT on computer chips and mobile phones to fight “missing-trader fraud”, which cost the UK exchequer £2bn-£3bn in 2005-2006.

France had feared the UK plan could export the fraud from Britain to France but found that its own VAT system was leaking more revenue than thought.

.................The reverse-charge system levies VAT only as goods are finally sold to consumers and not throughout the supply chain, eliminating the possibility of missing-trader fraud.
Mr Brown said the UK changes would remove 90 per cent of goods used for missing-trader fraud from the UK VAT system and would be introduced eight weeks after the European Council of Ministers gave unanimous final approval to the changes.

Yesterday a French official said the discovery of a big shortfall in VAT receipts persuaded finance minister Thierry Breton to drop opposition to the British plan. France would study the plan with a view to implementing “something similar” to combat its own fraud problem. The aide said investigators estimated carousel fraud caused a shortfall in VAT receipts this year of €300m to €2bn (£200m-£1.3bn).



I hope this move is successful - most of Europe is leaking money to the fraudsters, and budgets would all look a lot healthier if this was stopped. Of course the fraudsters will then move onto something else - twas ever thus.

6 comments:

Mark Wadsworth said...

Great news indeed!

Two points. 1) VAT fraud costs the UK about £8bn a year apparently, not the figure you used. 2) What this is doing is replacing with a sales tax at the retail point, much to be welcomed and as already suggested by UKIP!

snowflake5 said...

Mark it's not my figure, it's the FT's figure (I was quoting from their piece, hence the italics)

You seem awfully au fait with UKIP's policies - not thinking of following the fashion on the right and deserting the Tories for them are you?

Mark Wadsworth said...

As I am not a member of any party it's not deserting is it?

I work in tax and am a tax, benefits and pensions reform/simplification campaigner, so I have read all tax manifestos from all parties from Respect to BNP and chosen the best bits.

The best bit in the BNP manifesto was scrap the BBC licence fee, it's a poll tax for goodness sake! The best bits in the Green manifesto are increase land value tax, increase corporation tax and scrap Employer's NI. The best bit in Lib Dem manifesto was query whether there's any point to tax relief for pension contributions and the best bits in the Tory one were charge corporation tax on an accounts basis and exempt foreign income from tax. The best bits in the UKIP one are double the personal allowance and end means-testing.

Assuming that Labour's tax manifesto is what we have actually got, it is by far the worst with pretty much nothing good to say for it.

So there you go!

Mark Wadsworth said...

Oh yes, the Respect one was a load of drivel as well. At least Plaid Cymru seem to be in favour of Citizen's Income and SNP realise that you can help an exonomy by cutting taxes (albeit the wrong ones, see my letter in yesterday's FT)

snowflake5 said...

And yet, Labour is the only party amongst all you listed, that has managed to achieve ten consecutive years of growth in government! It means our practice is much finer than all the airey theories the other parties offer!

Anonymous said...

Ken Clarke did have a hand in the 10 years of consecutive economic growth. Even if Gordon fails to mention the growth period pre-May 1997 in his budgets.