Document Type
Article
Publication Date
9-26-2007
ISSN
1048-3306
Publisher
Tax Analysts
Language
en-US
Abstract
Missing Trader Intra-Community (MTIC) fraud and its offspring carousel fraud and contra trading fraud are siphoning huge amounts of VAT revenue from the UK Treasury. This fraud is not a function of the goods involved. It is a function of the market-place. Recently another type of market-place dependent VAT fraud has taken hold in the UK - car-flipping.
In some instances the market-place where these frauds festers is a pre-existing or natural market-place, one that grows out of legitimate commercial practices. Fraudsters enter this market-place (so the argument goes) and take advantage of legitimate businesses who unwittingly get caught up in the fraud of others. In other instances the market-place is a wholly artificial construct of the fraudsters. In this case, almost everyone involved has direct knowledge of the fraud. But make no mistake about it, it is the market-place that makes these frauds work.
Car-flipping is a type of VAT fraud that is analytically very similar to MTIC, carousel and contra-trading frauds. All of these frauds exploit exemptions in the VAT, sometimes the exemption is intended to prefer a minority group (disabled, status Indians), other time the exemption is a necessary attribute of a federal VAT (the zero-rating of intra-community sales).
Certified software solutions are proposed to counter these frauds. Doing it digitally is what the Lisbon Strategy is all about.
UK car-flipping is not just a UK problem. The single market allows any disabled citizen of any of the other 26 Member States to travel to London, purchase (and take possession of) a Lamborghini Gallardos, and with a UK address register the car (probably displaying UK plates) and then "flip" it for a profit. The actual "flipping" need not occur in London. If one wanted more, one could take the car to Denmark, or Sweden where the margin scheme, a local dealer and a 25% standard rate will put more "profit" in the "flip."
Recommended Citation
Richard T. Ainsworth,
UK Car-Flipping: The VAT Fraud Market-Place and Certified Solutions
,
in
47
Tax Notes
1157
(2007).
Available at:
https://scholarship.law.bu.edu/faculty_scholarship/1494
Included in
Accounting Law Commons, Banking and Finance Law Commons, Business Organizations Law Commons, Criminal Law Commons, European Law Commons, International Law Commons, Law and Economics Commons, Science and Technology Law Commons, Secured Transactions Commons, Tax Law Commons
