Stop the carousel!

The reverse charge mechanism may halt the flow but it is not the answer says the House of Lords European Union Committee in its recent report Stopping the Carousel: Missing Trader Fraud in the EU. Missing trader intra-community fraud is described as an 'exceptional crime' by the Lords and is 'exceptional in its scope'. The reports mentions that HMRC believe that carousel fraud was worth some £3 billion in 2005-06. The report then states that the fraud is 'exceptional in its execution: a deliberate criminal act undertaken by criminal gangs whose activities have led to a distortion of the UK's trade figures'. Furthermore the committee says that the design of the fraud is also 'exceptional'. This is because the nature of the VAT system enables companies to collect tax on behalf of the Government and 'simply fail to remit to HMRC'. The committee concludes that the...