VAT fraud costs Europe 50 billion per year

[TheMonkey]

VAT fraud is good business. It's a fact!

[threaded]

Only 50 billion? Now that is an underestimate with a seriously big U. Gosh those people live in a complete dream world. The VAT system is set up for fraud, sheet, it is actually more difficult to do things legal!!!!!!!

[AlfredJPruffock]

Originally Posted by xoggoth
The obvious solution to this is to abolish VAT. They could eliminate TAX and NI fraud in similar manner.

One day this will happen.

Like all great ideas, at first they are laughed at, then later everybody thinks why did nobody think of this before.

Tax is so loathed now by the population that the abolition of it will become a vote winner, given that in an infinite timezone everything will happen.

Even Scotland winning the World Cup in a final against Finland.


Time Will Tell.

[hyperD]

The obvious solution to this is to abolish VAT. They could eliminate TAX and NI fraud in similar manner.

Absolutely right, but The Clown has too much vested in his tax credits and tax trickery - to lose that much face would be unacceptable to the party that brings you Crapita, time and time again.

[milanbenes]

"Funny that VAT always used to be considered as the kind of tax that's impossible to avoid and very cheap to collect: perhaps a couple of laws stating that chain of reselling can't be longer than X companies, this would help reduce number of parasites who just resell same stuff.",


AtW goes into former regime mode.

Milan.

[xoggoth]

The obvious solution to this is to abolish VAT. They could eliminate TAX and NI fraud in similar manner.

[ladymuck]

D'oh, silly me!

[Lucifer Box]

In the same way that lease payments to PFI suppliers are an investment. Come on now, let's get with the NL plot.

[ladymuck]

Just thought, I find it interesting that tax fraud costs. Surely it's a loss of revenue, not a cost? How can you incur something that is supposed to be collected.

Hmm...

[ASB]

One of HMRC mechansims to reduce this is so called "revese charge". http://www.channelregister.co.uk/200...c_reverse_vat/

I seem to recall this was very similar to a system called purchase tax. Not bad, only 34 years to get back where they started from.

[AtW]

Funny that VAT always used to be considered as the kind of tax that's impossible to avoid and very cheap to collect: perhaps a couple of laws stating that chain of reselling can't be longer than X companies, this would help reduce number of parasites who just resell same stuff.

[Troll]

I propose we setup our own scheme and take advantage of the EUs generosity

( a mere joke m'lud)

[AlfredJPruffock]

Thats true at least the fraudsters are delivering goods and services which the consumer wants, more than you can say for the politicians, still only two years to wait unitl the EU make their report, I can hardly wait.

[Dundeegeorge]

And it's still much much much cheaper

than either Gordon or the EU.
Keep that vat fraud, execute the commissioners, and the Exchequer.

[AlfredJPruffock]

One fraudster told the Guardian: "We have a straw in every VAT pot in Europe, and we're going to keep sucking money out until they're empty. The scale of this thing is much bigger than most governments either realise or are admitting."


VAT fraud costing Europe €50bn a year

Carousel scam escalates out of control as governments are accused of denial


The explosion in "carousel" VAT fraud across the European Union over the past year is said to be costing governments a total amount more than they spend on the common agricultural policy each year, the Guardian can reveal.

With Britain set to lose up to £10bn in 2006 - equivalent to 3p on the basic rate of tax - European officials are warning that the problem is escalating rapidly across the EU, and other countries are likely to be experiencing losses of similar proportions. If the estimates are correct, the EU's total loss each year would be around €50bn (£35bn) - the same as total common agricultural policy spending, and five times more than expenditure on employment and social affairs.



"This is now the number-one tax fraud. We are losing billions of euros," said the EU tax commissioner, Laszlo Kovacs.

So-called carousel fraud involves compact, high-value goods such as computer chips and mobile phones being shipped into an EU country free of VAT. The tax is added when the goods are sold but is not handed over to the respective government.

The loss is compounded when the goods are re-exported by another company in a chain of trades, known as a carousel, and the VAT is reclaimed - even though it had not been paid in the first place.

In the past year, goods have started to be exported to countries outside the EU, such as Dubai, and then reimported to another EU state and spun round the carousel again, often many times.

Organised criminals and terrorist groups are drawn to the crime because of the huge profits involved. A Guardian investigation earlier this year discovered massive growth in the fraud, with perpetrators now so sophisticated that they engage in "virtual" carousel fraud, using computers to generate an illusory string of trades to reclaim tax.

One fraudster told the Guardian: "We have a straw in every VAT pot in Europe, and we're going to keep sucking money out until they're empty. The scale of this thing is much bigger than most governments either realise or are admitting."

UK losses in 2005 are thought to have risen to £5bn, and could be double that this year, according to estimates based on HM Revenue and Customs assessments of fraudulent trades. The number of officials investigating carousel fraud was recently doubled to more than 1,000.

The UK's £5bn loss in 2005 represents about 6.5% of the VAT take. If EU officials are correct, at least €50bn is being lost to criminals across Europe each year. The commission has begun an investigation to determine the precise losses, but results are not expected for two years. Werner Blockman, a fraud expert at the commission, said: "The problem is that VAT is a member-state competence. We can only try to get them to cooperate on this, but we cannot force them."

Ian Watson-George, the head of customs at the commission's anti-fraud office, said no one could be sure of the exact extent of the losses, but agreed that the scale of carousel fraud around Europe was probably similar to that in the UK. "All the member states are being affected to a greater or lesser degree, because these frauds are so easy to set up, and so difficult to detect and dismantle."

Not all EU countries will admit they have a carousel fraud problem. One British tax investigator said: "They're like alcoholics. You first have to get them to admit they have a problem before you can decide what to do about it."