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20-12-2017 Written by admin Category: Financial Crime

The European Commission has put forward new proposals as it seeks to tackle tax fraud committed through the trading of goods between European Union member states. Sales tax fraud is estimated to cost countries within the EU over 50 billion euros (£44 billion) every year in lost tax revenue, with Interpol suggesting the actual figure could be almost double.

The Commission’s proposals would see tax authorities in EU states stepping up their cooperation with one another, increasing the amount of information that is shared regarding cross-border sales in a bid to eradicate value added tax (VAT) fraud.

How is VAT fraud carried out within the EU?

Corporate trade between EU countries takes place without VAT being levied, with this tax only being paid by the company that sells the finished product to the customer. This creates opportunities for criminals to profit by collecting full VAT from a transaction, but then failing to pay this to the state’s tax authorities. This type of fraud is known as Missing Trader Intra Community (MTIC) fraud, or carousel fraud, and is often linked to the trading of goods such as mobile phones and computer chips. Substantial quantities of these goods will be imported from another EU country and are then sold on at a VAT-inclusive price, with goods passing through a complex chain of companies. VAT fraud generates funds for other criminal activities, including organised crime and terrorism, according to EU tax commissioner Pierre Moscovici.

What changes are being proposed to clamp down on VAT fraud?

The EU’s current VAT rules are seen to be outdated and no longer fit for purpose. Mr Moscovici stated that the proposed new rules have two objectives: to prevent fraud and to make life simpler for companies operating within the EU. It is proposed that this will be done by improving information-sharing between states, with a number of strategies used to target particular types of VAT fraud. Examples include allowing tax authorities in other countries to access car registration databases to prevent new cars being sold as second-hand, and the exchanging of information between customs authorities on goods imported from outside the EU.

What should I do if I am subject to a VAT fraud investigation?

Tax fraud is an extremely complex area of law. If you are under investigation, our Criminal Defence Solicitors can provide expert advice and representation. We have years of experience handling high-value and legally complex tax fraud cases on behalf of a wide range of clients. Our Financial Crime Solicitors have strong technical knowledge and understanding, and provide a service that is exceptionally strategic and results driven. We can attract the highest calibre barristers to provide support when necessary.

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We have offices in London, Sheffield and Manchester, and serve clients throughout England and Wales. Contact us today on 0808 168 5813 or using our online contact form to find out how we can help.

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