VAT missing trader fraud has cost the UK economy between £2bn and £3bn over the past year, according to the latest figures released in chancellor Gordon Brown’s pre-budget report.
The fraud, also known as missing trader intra-community (MTIC) or VAT carousel fraud, is prevalent in the IT industry, particularly the chip, components and mobile phone sectors.
However, in a positive move for HM Revenue and Customs (HMRC), the report also revealed that levels of attempted fraud for the year stood at between £3.5bn and £4.75bn, which equates to almost £2bn saved by HMRC’s anti-fraud measures.
An HMRC representative said in a statement to CRN: “HMRC has strengthened its strategy for tackling MTIC fraud in response to the rapid increase in attempted fraud in 2005 and 2006. Operational indicators suggest that a significant proportion of the attempted frauds are now being stopped. The level of attack from attempted fraud has also been greatly reduced.”
Earlier this month, the government suffered a further setback in its fight against fraud when finance ministers in Europe failed to agree on its Reverse Charge proposals (CRN, 4 December).
But the chancellor has outlined plans to add a further 100 officers to HMRC’s MTIC fraud team, bringing the total to 1,500.
Brown said in the report: “The government is determined to sustain the impact of its strategy and to ensure that HMRC has the tools it needs to combat MTIC fraud.”
Dennis Knowles, indirect tax partner at market watcher Deloitte, said: “The IT industry is a particular target because chips, components and mobile phones are high value but low weight and are easy to move around.
“We are advising VARs to really know who they are doing business with; this can be done by carrying out a simple background check on a firm to ensure they are legitimate.”
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