News

Changes to the VAT law

The HMRC are introducing quick and effective changes to UK VAT law in order to counter the growing number of VAT ‘carousel’ fraud.

VAT ‘carousel’ fraud, ALSO KNOWN AS Missing Trader Intra Community fraud, occurs when small, high valued goods are passed between traders into the UK and back out via EU countries, with VAT claimed each time goods cross the border without corresponding VAT being paid to HMRC.

The new law hopes to reduce the billions of pounds lost through this particular type of fraud and focuses itself on such goods:

• Mobile phones.
• Computer chips, processors and CPUs
• Electronic storage medium
• Electronic devices used for recording, handheld computers, other communication devices, GPS systems, etc

If you are involved in buying or selling such goods as part of your trading; you will need to make notable changes to your trading practices and how your VAT-based transactions are recorded and reported.

This new law is likely to be in effect from mid 2007 due to delays in the EU approval process. HMRC will commit to provided 8 weeks notice.

Added: 06/02/2007