Contact: Matthew Longbottom
Deloitte
PR Manager
+44 20 7303 7030

Friday June 1st 2007 sees the introduction of new rules making it harder for organised criminals to steal VAT from the UK taxpayer. Carousel fraud, otherwise known as Missing Trader Intra-Community (MTIC) fraud, is highly prevalent in the mobile phone and microchip distribution industries as they are both small items of high value.

The new VAT accounting system will be applied to mobile phones and computer chips. This will effectively remove the opportunity for missing trader fraud to occur in connection with these items and make sure that the full and correct taxes are paid on these products by all traders.

Dennis Knowles, indirect tax partner at Deloitte, said: “We welcome the positive move by HMRC to close this problematic loophole affecting the telecoms and chip industry. However, the House of Lords European Union Committee has recently acknowledged that the changes being made from the 1st June may mean that the fraud simply "mutate[s] into other sectors”.

“The House of Lords in its report entitled 'Stopping the Carousel: Missing Trader Fraud in the EU' has recommended that the Government start discussions with the European Commission and other Member States regarding "A wide ranging change to the VAT system" as the "current mechanism for intra-Community VAT transactions is not sustainable". Unfortunately, potentially tighter VAT regulations are the inevitable outcome of unscrupulous traders looking to exploit the systems and deprive the nation of its fair taxes.”

If you would like to talk to one of our partners about the implications of the new measures then please contact mlongbottom@deloitte.co.uk

For further information please contact: mlongbottom@deloitte.co.uk

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About Deloitte

In this press release references to Deloitte are references to Deloitte & Touche LLP which is among the country’s leading professional services firms, providing audit, tax, consulting and corporate finance services. Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities.  Neither DTT nor any of its member firms has any liability for each other’s omissions.  Services are provided by member firms or their subsidiaries and not by DTT.  Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority.  The information contained in this press release is correct at the time of going to press.