Reverse charge ' the answer? By Rebecca Benneyworth
Enabling legislation is included in this year's Finance Act to require traders selling certain goods to account for VAT under the reverse charge procedure. The change is intended to reduce, or it is hoped eliminate, missing trader fraud, which is currently costing around £2 billion a year in lost tax.
Tax is lost when traders purchase goods which are exported to the EU, reclaiming their VAT on the purchase, as the sale is not liable to UK VAT as an EU export. The loss of tax arises because the business supplying the goods disappears without accounting for the output tax on the sale.
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Very low de-minimis
I am struck by the very low de-minimis of only £1000. Is that per quarter or per year?
It looks as if companies buying large amounts of computer hardware will be caught.
'electronic storage medium' covers a huge range of different divices.
Where did the list of items affected come from?
Dilatory ivory-tower academics
The attitude of the EU commission (and its member states) to changing the VAT system that currently allows huge and increasing amounts of money (our money, MY MONEY) to be stolen every day is scandalous. The latest EU news release on this I know of is here:
http://europa.eu/rapid/pressReleasesAction.
It is full of civil service speak (suggest, give consideration to, opening a debate) when the need is for action.
Too much attention is being given to the hallowed principle of free movement of capital, labour and goods at the expense of huge fraud. It should not be beyond the wit of those involved to tackle this effectively and now at no expense to the taxpayers and with no effect on freedom of movement.
Still, what can you expect from a bunch of inept pen-pushers whose only real competence lies in lining their own pockets at our cost?
There is nothing they can do really
The list will continue to expand as high value items continue to grow. Silver bullion comes to mind immediately etc. Then, how about digital product, softwares etc. the list goes on.
The system is just unworkable and it increses suffering of legitimate business. The EU/government is simply trying to shift responsibility of policing a broken system to the citizen (while government role is supposed to leave citizen to enjoy their private life as much as possible).
And then they let those carousel fraundster escape too easily (one is in switzerland, the other walk off a court session and disappear), the next one will be out of the prison in less than half of the term due to good behaviour..
Reverse charge
Brussels have said no to Germany and Austria applying this across the board. Lets make it simple - return to pre 1992 accounting for tax on arrival at country of destination. Simplified S.A.D and get rid of Intrastat and E.C. Sales lists in the process.
Massive headache
I work for a retailer that sells both to private individuals and VAT registered businesses. If I've understood correctly, these changes could cause us huge problems, both from administering the reverse charge on purchases and ensuring that VAT is not charged on sales above £1,000 per quarter on affected products to the same customer.