Fuel frauds, VAT losses cost the country 13 billion pounds, says PAC

Fuel frauds, VAT losses cost the country 13 billion pounds, says PAC

	Published : Wed, 07 Dec 2005 10:05 By : Cedric Benson Print this Story

LONDON: Fuel fraud and losses on account of VAT cost the country 13 billion pounds, according to the Public Accounts Committee. PAC chairman Edward Leigh said a "mountain of money is lost" on account of these two and there is need for immediate steps to curb the loss.

The PAC in a report said 850 million pounds, or 6 per cent of the market, was lost through fuel duty fraud, which mainly occurred through the misuse of rebated fuel meant for agricultural and heating purposes, while losses from VAT fraud totalled 11.9 billion pounds in the 2003-04 tax year.

The customs and excise department, which is a part of the revenue and customs unit, said it had collected 162 billion pounds in VAT and in duties in 2003-04 -- 63.6 billion pounds from VAT and 22.5 billion pounds from oils duty.

The customs said it is trying to reduce the extent of the fraud -- from 6 per cent to 2 per cent by 2006.

Leigh said only few fraudulent traders have been brought to justice and "who can believe that potential crooks are being effectively deterred?"

While admitting that there is progress in cutting VAT losses-- from 15.8 per cent of the theoretical yield to 12.9 per cent in 2003-2004, Leigh said the department has so far been unable to determine how much of the extra revenue brought in is due to enforcement activity and how much is simply the result of economic growth.

The PAC said in 2004, only 21 people were prosecuted for fuel duty fraud, with the average sentence of 15 months.

While the revenue and customs department has set up a regulatory scheme, the Registered Dealers in Controlled Oils, to control the supply of rebates relating to oil, the PAC said the scheme had been slow to get started.

The revenue and customs department said it is happy that the PAC recognises that progress has been made in cutting VAT losses. "HMRC is committed to tackling oils and VAT fraud and has in place a coordinated programme of activity to support those who wish to comply while identifying and tackling the non-compliant."

PAC member Richard Bacon, Conservative MP for South Norfolk, said these figures give an idea of the staggering amounts of money that are simply disappearing every year.