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01/06/2007
New process launched to combat VAT fraud
A new method of accounting for VAT is being introduced by HM Revenue & Customs (HMRC) today, which will change the way VAT is paid on mobile phones and computer chips, in order to combat fraud in these goods.
From June 1, VAT-registered customers of these goods will be required to pay the VAT on the sale to HMRC, as opposed to the supplier, which is the norm in most transactions.
The move is designed to help combat what is known as MTIC (Missing Trader Intra-Community) fraud - also known as carousel fraud.
This accounting scheme is known as the "revenge charge", and it removes the mechanism by which fraudsters steal VAT when trading in certain types of goods.
The process is targeted at mobile telephones and computer chips as these are the goods most commonly used in MTIC fraud.
Mike Eland, HMRC Director General Enforcement & Compliance said: "MTIC fraud is a serious criminal attack on the tax system which diverts vital resources away from the UK's public services into the pockets or organised criminals and we are absolutely committed to stopping it. Already our strategy has significantly reduced the level of attack, and we continue to track down and prosecute those behind the fraud as well as targeting others who choose to profit from it.
"The fraud is becoming increasingly sophisticated and complex. HMRC have further strengthened their strategy for tackling MTIC over the past few months and the reverse charge will be an important tool in combating it."
(KMcA/JM)
From June 1, VAT-registered customers of these goods will be required to pay the VAT on the sale to HMRC, as opposed to the supplier, which is the norm in most transactions.
The move is designed to help combat what is known as MTIC (Missing Trader Intra-Community) fraud - also known as carousel fraud.
This accounting scheme is known as the "revenge charge", and it removes the mechanism by which fraudsters steal VAT when trading in certain types of goods.
The process is targeted at mobile telephones and computer chips as these are the goods most commonly used in MTIC fraud.
Mike Eland, HMRC Director General Enforcement & Compliance said: "MTIC fraud is a serious criminal attack on the tax system which diverts vital resources away from the UK's public services into the pockets or organised criminals and we are absolutely committed to stopping it. Already our strategy has significantly reduced the level of attack, and we continue to track down and prosecute those behind the fraud as well as targeting others who choose to profit from it.
"The fraud is becoming increasingly sophisticated and complex. HMRC have further strengthened their strategy for tackling MTIC over the past few months and the reverse charge will be an important tool in combating it."
(KMcA/JM)
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