The government is playing down rumours of a setback in its fight against VAT carousel fraud after it emerged that finance ministers in Europe have failed to agree on its controversial Reverse Charge strategy.
Reverse Charge, which would levy VAT for chips, components and mobile devices onto the end-user rather than at each stage of the supply chain, was initially intended by HM Revenue and Customs (HMRC) to come into force in October (CRN, 24 July). However, it was delayed earlier this year until 1 December (CRN, 25 September). There have been further delays and implementation has now been pushed back until January.
But finance ministers in Brussels have put a spanner in the works over fears that the fraudsters would switch operations from the UK to other European countries and are hoping to delay the strategy until it can be rolled out across all 25 EC member states.
A Treasury representative told CRN: “The government will introduce the Reverse Charge as soon as possible. Discussions with our European partners continue and we hope to reach agreement as soon as we can.”
However, Anthony Elliot-Square, executive at the Federation of Technological Industries, said: “The government should concentrate on fraudsters and not innocent businesses. HMRC has been playing a game over the past eight to 10 months where it has been withholding VAT repayments on the grounds of ‘extended verification’. This is amounting to hundreds of millions of pounds.”
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