VAT carousel fraud is rising strongly, billions going missing, OK, OK, we know all that. The Guardian’s take?
Tax rises or government spending cuts looked a growing possibility yesterday
Spending cuts? This lot? What the hell has Ashley Seager been smoking?
The solution (which apparently the authorities are applying in some existing carousel frauds involving mobile phones) is to zero rate VATable sales between VAT registered entities (as they are between export/import traders within the EU). This means that it’s only at the retail end (where you have a large number of small transactions) where VAT is collected as against wholesaler to wholesaler transactions where you have a few gigantic transactions. It’s obvious (and always has been) that it’s easier to commit fraud where you have one enormous transaction rather than a lot of little ones. Eliminating trader to trader VAT charging has the added benefit of removing the enormous sums of VAT sloshing round the system waiting for payment/repayment. Does HMR&C want to know? Of course not!
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