An increase in ‘carousel’ VAT frauds involving platinum and other precious metals has helped to push up the ‘gap’ between the amount of VAT due and that collected by 25%, an expert has said.
Darren Mellor-Clark of Pinsent Masons, the law firm behind Out-Law.com, was commenting as HM Revenue and Customs (HMRC) announced that the ‘VAT gap’ had increased to £12.9 billion from £10.3 billion in the year ending April 2013.
“The VAT gap is of grave concern to the exchequer as VAT contributes approximately £100bn to the UK tax take in comparison with approximately £35bn that corporate tax brings in,” he said. “As the economy continues to recover it is vital that VAT revenues rise along with the upturn in economic activity. Without this rise, the Government’s spending plans face further challenge.”
“Given the effort which HMRC has directed to pursue VAT fraud, they are likely to be disappointed that the gap has increased by £3bn in just over a year. HMRC is rightly proud of a string of major successes that it has had recently in clamping down on criminal tax evasion,” he said.
Mellor-Clark said that HMRC would be likely to ask for more resources from the Government to tackle the ongoing problem of carousel, or missing trader intra-community (MTIC) frauds. These frauds take advantage of the VAT exemption when goods are imported or exported within the EU, and rely on lengthy circular supply chains controlled by fraudsters. After HMRC’s recent successes in clamping down on frauds involving computer chips, mobile phones and carbon credit trading, criminal gangs were now focussing on platinum and other precious metals, Mellor-Clark said.
Continue reading Precious metal frauds push up VAT gap by 25%, according to expert.