European Council to create network to combat carousel fraud

The European Council is to create a network of pan-European tax officials to detect and combat cross-border VAT fraud in a bid to tackle costly carousel schemes more effectively.
 
Eurofisc will come about following the adoption of new regulations, which aim to improve cooperation between national tax administrations. European member states will be required to proactively exchange information and provide feedback on those areas in which cooperation is required.
 
According to the Council, Eurofisc is intended to create a multilateral “early warning mechanism” and coordinate data exchange and the work of liaison officials who will be instructed to act on the warnings they receive.
 
It said: “Combating VAT fraud represents a major challenge for the EU, as every year it costs member states billions of euros in lost revenues. VAT fraud is often organised on a cross-border basis, in particular so-called carousel schemes where goods are traded amongst several operators in different member states without paying VAT to the tax authorities.”
 
A new report undertaken by financial researchers ORC International on behalf of HM Revenue & Customs, meanwhile, revealed that, contrary to earlier suggestions, the increase in VAT in January this year in the UK did not cost less to implement than the decrease introduced in December 2008.
 
The survey indicated that more than three quarters of businesses believed the last changes took the same amount of time and money to deal with as earlier ones despite hopes that the lessons learned first time around would help reduce the burden.
 
In fact, some 43% of large companies even thought that the VAT increase had cost them more to handle, with only a third believing it cost them roughly the same to deal with as the decrease.
 
But more than half of respondents could think of nothing that either the government or HM Revenue & Customs could do help them better prepare for next year’s VAT hike, although four out of five were keen to have at least four weeks’ notice of any future changes to give them time to adjust.