6. We consider that the
following raises questions of political importance, but make no
recommendation for its further consideration:-
H M CUSTOMS AND EXCISE
(17857)
5175/97
COM(96)681
| Commission Report on administrative co-operation in the field of indirect taxation (VAT).
|
| Legal base:
| Article 14 of Council Regulation (EEC) 218/92.
|
Background
6.1 Before 1993, cross-border
trade in goods between taxable persons was checked at frontiers.
The abolition of border controls on 1 January 1993 required co-operation
between Member States on a new scale, in particular to obtain
information on intra-Community transactions and to permit confirmation
of the validity of VAT numbers. The VAT Information Exchange
System (VIES), which is a common computer network, was set up
for this purpose.
6.2 Under the Regulation[17]
which provides the legal framework for the VIES system, the Commission
is required to report every two years on the conditions of its
application. The Commission's first report, in 1994, outlined
the new administrative framework. This second report describes
the development of the arrangements since 1993, and makes recommendations
for improvements.
The report
6.3 In an Explanatory
Memorandum dated "February 1997", the Exchequer Secretary
(Mr Oppenheim) notes that the report concludes that Member States
have derived benefits from administrative co-operation, the quality
of VIES data has improved and that technically the system continues
to function to a high standard.[18]
6.4 The report, however,
is not without criticism. The Commission comments less favourably
on:
(i) the little
use made of the network for the communication of messages between
Member States in the fight against fraud;
(ii) the reluctance
of some Member States to co-operate with one another on a multilateral
basis in investigating suspected fraud cases;
(iii) the unwillingness
(or inability) of most States to provide details of additional
tax discovered because of information exchanged over the VIES;
(iv) the limited
access provided for officials to the VIES system in some Member
States;
(v) bottlenecks
and backlogs in some Central Liaison Offices which act as the
normal channel of communication between competent authorities.
6.5 In its conclusion,
the Commission says that, although administrative co-operation
is improving, and the VIES has continued to function to a high
standard, there are still unsatisfactory features of the present
control arrangements, some of which arise from the deficiencies
of the basic legislation (the 6th VAT Directive).
6.6 Pending a major overhaul
of the Community VAT legislation, the Commission makes a number
of recommendations which the Minister summarises in his Memorandum:
-- the
taxation of intra-EC trade should be incorporated into the standard
control methodology of Member States;
-- the
use of the specific enquiry facilities should be more widespread;
-- Member
States should engage in more multilateral control work at the
largest businesses;
-- greater
efforts are needed to increase activity in the prevention and
detection of fraud;
-- Member
States should consider the adequacy of enforcement policies to
ensure that traders make timely and correct declarations of trade;
-- efforts
to improve the arrangements for recovery of tax need to be sustained;
and
-- the
Community, in partnership with Member States, must encourage the
development of administrative co-operation to enhance the ability
to meet the challenges now and in the years ahead.
The Government's view
"The UK has
taken the lead in the promotion of multilateral assurance programmes
and has appointed an office with special responsibility for EC
administrative co-operation in the task of debt recovery. The
Government is content with the recommendations in the report which
are aimed at improving administrative co-operation between Member
States in the field of indirect taxation. Such measures accord
broadly with the approach already adopted by the UK in these matters
and where administrative action may be required, this would be
entirely an operational consideration....
"The recommendations
have no financial implications for UK expenditure. Implementing
these recommendations would not require additional expenditure
and would not impose additional compliance costs on business."
Conclusion
6.8 This report indicates
that, although the VIES system operates to a very high standard,
some Member States could do more to make the administration of
VAT and the prevention or discovery of fraud more effective.
We therefore think that it raises matters of political importance
but, as this is a report rather than a formal proposal, we make
no recommendation for a debate.
17 Council Regulation (EEC) No. 218/92; OJ No. L 24, 1.2.1992. Back
18 However, it should be noted that in our report on Document 9466/96, which we considered in our Twenty-ninth Report of last Session under our reference (17373) on 16 October 1996, we said, at paragraph 8.12: "The shortcomings of the existing transitional VAT system are well known. It is complicated, it does not facilitate intra-Community trade as much as it should and it is subject to fraud, particularly in the transit procedures." It follows that even if the VIES system is functioning at "a high standard", it is doing so in relation to a transitional VAT system which is far from perfect.
Back
|
