UK Says VAT Fraud Costing £7.3 Billion Per Year

by Jason Gorringe, Tax-News.com, London

14 February 2002

The UK National Audit Office (NAO) revealed earlier this week that indirect tax fraud is costing the Treasury around £7 billion per year in lost revenue, prompting the NAO chief, Sir John Bourn, to describe the rising VAT and excise duty evasion levels in the United Kingdom as 'a major problem'.

The losses came to light as a result of a new monitoring system adopted by the Customs department, and conincidentally, are roughly equivalent to the shortfall estimated by the Institute for Fiscal Studies in Chancellor Gordon Brown's NHS funding proposals.

Although various Government figures, for example the Chairman of the Commons cross-party Public Accounts Committee Edward Leigh, have professed themselves 'shocked' by the extent of indirect tax evasion, the Treasury has attempted to play down the situation, insisting that the figures released by the NAO are 'not new'.

'The Government is determined to crack down on smuggling and fraud which is why in March 2000 the Chancellor announced the biggest ever Government investment in tackling smuggling and fraud,' a spokesman explained on Wednesday.

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