The Handelot Times
The Old Hand: would i-could i-should I?
The biggest “taboo” subject that existed in the trading business was “duty fraud,” or as it was known in the UK, VAT fraud. I am sure we are all very aware of such!
What is the reason for this?
The biggest “taboo” subject that existed in the trading business was “duty fraud,” or as it was known in the UK, VAT fraud. I am sure we are all very aware of such!
If you’re not aware of it, what it involved was a fraudulent company in one EU country importing a product from another company in another EU country. Having no VAT to pay on entry, the fraudsters then sold that product to another company in their receiving country, charging VAT at the standard rate on that sale and not declaring that transaction to the tax authorities. After accumulating the tax revenue through time and transactions, they then disappeared.
Blatant tax fraud indeed.
At one point, the British government issued figures suggesting that VAT fraud on mobile phone trading was costing the UK taxpayers in excess of 6 Billion GBP per annum. With the implementation of intra community transactions in 1993 (and right up until 2006 with the implementation of a reverse charge mechanism), this fraud was prevalent. If the losses were so substantial to the UK treasury then why did they allow it to go on for 13 years with very little disruption or intervention? The reverse charge mechanism immediately stopped the fraud. What is the real truth about this fraud and how has it really affected all of us in the trading business?
