Standard report on the accounts of HM Revenue and Customs: VAT missing trader fraud

VAT missing trader fraud is a large-scale criminal attack on the EU VAT system, which costs the UK exchequer approximately £1 billion a year. In February 2006, the UK Government sought from the European Union authority to apply a special measure (the 'reverse charge')derogating from the Sixth VAT Directive for a wide-range of electronic goods. The Council of the European Union approved the derogation on 16 April 2007, but the Council's decision only allowed the 'reverse charge' to apply to commerce in mobile phones and computer chips, rather than the wider range of products that the United Kingdom had originally requested. Ultimately, the problem can only be tackled at EU level and the European Union will have to agree a new legislative framework for administering VAT, if missing trader fraud is to be eliminated in the long term.

United Kingdom: House of Commons: Public Accounts Committee: 45th Report (2006-07)HC 250 http://www.publications.parliament.uk/pa/cm200607/cmselect/cmpubacc/250/250.pdf

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