Counter-measures are failing to have any impact on multi-billion pound missing trader fraud
A report released today by the European Committee accuses the UK government of failing to tackle the multi-billion pound issue of VAT fraud involving EU cross-border transactions.
According to the study, “Stopping the Carousel: Missing Trader Fraud in the EU”, cross-border fraud accounted for losses of almost £5bn for 2006/2006 in the UK alone.
The fraud exploits the fact that since 1992 cross-border transactions within the EU have not been subject to VAT. Importers receive the items without having to pay VAT, but charge VAT on the resale without remitting this to the revenue authority. If this process is repeated a number of times, it is referred to as Carousel Fraud.
The report concludes that steps currently being taken to tackle missing trader fraud are inadequate and “unsustainable”, and calls upon the UK Government to “to work with other Member States to implement a system for taxation of intra-Community transactions which will be more enduring and less vulnerable to major fraud.”