'Cunning plan' by HMRC to shift VAT fraud

If validation is not a problem, then I fail to see how Internet Taxation in the European Union is currently working as no central database of VAT numbers is available to the seller.

On the basis proposed why charge outputs at all, on any thing, the indicating delimiter would be determined by a non VAT supply.

Although the links refer to online software purchases, to enact what is proposed would surely make Council Directive 2002/38/EC redundant.

introduce the reverse charge procedure for all goods and make it standard practice? That way a supplier is forced to obtain a VAT number of the customer and check it is current before supplying.

The trader at the end of the chain must declare the VAT as an output/input on the basis that the sellers VAT number is genuine and not the subject of an identity theft?

To my knowledge, there is no speedy mechanism, online or otherwise for the trader to determine whether the suppliers VAT number is genuine other than by calling HMRC directly on their help line. Average wait time is subjective but could be ten minutes or more.

Such information must fall under the Data Protection Act and HMRC would be deemed negligent by revealing this information.

If the suppliers VAT number is bogus, then one assumes an output will be payable to HMRC but an input will not be allowable? One also assumes that VAT auditors will have to validate each supplier's VAT number by phoning a friend.

Validation may be why the EC have not implemented this more widely. Online databases that give company details do not in my experience give the company's VAT number.

Validation of VAT numbers should not be an issue. The beauty of using the reverse charge is that it does not matter if the supplier has not registered for VAT when he should have done, input VAT must still be charged by the recipient to himself and is recoverable if he makes taxable supplies. Whether or not it applies depends on the nature of the supply, and where it comes from - thus it applies to supplies of services from non EU suppliers. If you took it to the end of the chain, HMRC would not have to bother with anyone other than either an exempt end user or the retailers.

I have had many disagreements with Customs over the years, but this request for a derogation is in fact very good news. My only complaint is that HMRC should have done it years ago. Using the reverse charge mechanism removes all opportunity for Missing Trader fraud, since the cash which is targeted by the fraudsters is never paid out, by either HMRC or the unwitting innocent trader. No cash paid out for VAT = no opportunity for MT fraud. It is simple and will be 100% effective against MT fraud in the goods specified. It will not matter that there are an infinite number of steps in a circular chain, since VAT will only be paid by the final retailer. Other countries are not affected by this measure, since this would not affect dispatches of goods to other EU countries. Recipients of such goods already account for acquisition VAT by a similar mechanism, so they are at no greater risk of being a victim. Other EU member states will only be affected if the fraudsters moved country from the UK. We should support this plan, since the successful implementation should allow HMRC to withdraw the joint and several liability rules which are blighting genuine businesses in the affected areas.