30 July 2004
Fraud and error is leading to the loss of a 'staggering' £11bn in VAT, according to the Commons' Public Accounts Committee.
PAC chair Edward Leigh urged Customs to consider tougher penalties as a deterrent to evasion and under-declaration. It should also take advantage of its impending merger with the Inland Revenue to improve data matching to identify traders in the black economy, he said.
In 2002/03, there was £109bn of VAT collected, giving a net receipt of £64bn. The government has set Customs a target to cut the amount lost through fraud and error from 15.7% to 12% of the total take.
Leigh called for a more vigorous approach to prosecutions for VAT fraud, pointing out that the scale of losses indicated these would be cost-effective.
The committee also questioned Customs' reluctance to report accountants or other professionals to their professional bodies for disciplinary action. Customs should work with professional bodies and the business community 'to agree criteria for reporting and the remedial action expected', the committee said.
PFjul2004
