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Dedicated to the taxpayers of Britain, and the employees of Her Majesty's Revenue and Customs (HMRC), who have to endure the monumental shambles that is HMRC.
Wednesday, 27 February 2008
HMRC's Magic Carousel
Now, as we all know, HMRC being a tool of the state is "honour" bound to treat everyone in exactly the same way and not be discriminatory.
The cynics amongst you might argue that HMRC achieves this by treating everyone equally badly. However, it would seem that some are treated more badly than others.
VAT traders have accused HM Revenue & Customs (HMRC)of discrimination, as a result of HMRC's attempts to reduce the costs of the fallout from the carousel fraud scam.
The traders say that despite complying with new regulations, HMRC is delaying repayment of hundreds of millions of pounds due to them from VAT rebates.
Peter Carnall, owner of Eurostar Global, believes that he is being "treated like a criminal" by HMRC.
He is quoted as saying:
"They have forced Eurostar to be without finance and to have extensive problems because of their actions. They haven't paid us a penny."
Mr Carnall has been trying to reclaim £114,000 from HMRC for nearly a year, without success.
"Nearly 12 months after it started trading Eurostar is still without any money which HMRC commissioners are arguably illegally holding."
Martin O'Neil, a senior consultant with Vantis Tax, business advisers that are handling more than 20 delayed payment cases, says:
"We know that fraud exists but it doesn't follow that everybody should be tarred with the same brush."
Carousel fraud has occurred where fraudsters have obtained VAT registrations to buy items VAT free from other EU states before selling them at VAT inclusive prices, they then disappear before HMRC can claim the VAT.
HMRC has decided to use the "one size fits all" approach, and work on the assumption that all VAT registrants are criminals until proven otherwise. This of course goes aginst the basic concept of English law, "innocent until proven guilty".
As such HMRC have slowed down VAT registrations and introduced the "reverse charging mechanism" for the sales of mobile phones and computer chips (where the carousel fraud occurs). Under this mechanism the customer is responsible for paying VAT first, before the trader makes a claim.
A VAT Tribunal recently ruled in favour of Livewire Telecom, over a £2M VAT claim, prompting hopes of a speeding up of payments by HMRC.
However, these hopes have been without foundation. HMRC will appeal against the decision and states that:
"We have had no complaints about delays."
HMRC in denial as ever!
Tax does have to be taxing.
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