Lib Dems show real initiative on VAT fraud

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I have considerable sympathy for a Lib Dem initiative that has made progress in the EU Parliament that appears to have attracted remarkably little attention in the UK press. As they note:

The European Parliament has backed a report by Sharon Bowles MEP (UK, Lib Dem) that aims to break the prolonged EU deadlock over fighting VAT fraud.

The report's key recommendation is to levy VAT of 15% on all cross-border EU trade on goods and services. Under the proposals, Member States would charge a top up rate to bring the total VAT charge in line with current levels within their own countries. For example, the UK which has a VAT rate of 17.5% would charge 2.5% on all imports under the new system. The 15% levied by the exporting Member State would also be paid to the UK.

Yes of course there is an admin issue in this. And of course this creates the question of whether VAT will remain a destination tax. Procedures to ensure VAT reaches the correct destination will need to be put in place if that is to be the case, and I can see this adding complications to Intrastat data, but the aim of this proposal is entirely sensible. If enacted (and that is a big if) it would prevent most of the current VAT fraud in Europe that takes place as a result of cross border abuse, such as carousel fraud.

Any trader who objects to that, and any professional body that objects to that is action contrary to the public interest. There is not a politician in Europe who thinks we can live without VAT. In that case making sure it is collected is in everyone's best interest as it reduces the potential burden on all honest taxpayers.

That's why I like this initiative. It's a real step forward in stopping the organised crime that some accountants must, without any doubt at all, be involved in.

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