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Wednesday, July 26, 2006

Moving the Carousel to the Continent

Once again the UK Taxman proves that the underlying principle of "I'm Alright Jack" applies in all negotiations with our EU partner countries.

The upcoming solution to the rampant Carousel Fraud going on is the introduction of the "Reverse Charge" VAT Accounting Rule.

As Mike Cheetham, director of trading company Bond House Systems explains:
'It's going to make the UK a VAT-free haven to feed VAT fraud in every state,' Adding that the reverse charge will speed up fraud for other member states. Cheetham believes an end-seller fraud will be produced, where a person selling to the public collects the VAT but doesn't pay the VAT to Customs. He also said an end-user fraud will be generated, where fraudsters will pretend to be VAT registered in order to buy goods VAT-free.

Bond House Systems advice should be noted as they are probably quite expert in Carousel Fraud after their epic 3-year battle with the VATman, which they ultimately won.

Personally, I’m all for competition between member states in order to reduce end-user taxes. However, I suspect that the governments will not reduce its’ expenditure in order to compete and instead will move the tax burden to where the punters have no option but to pay up.