Supplementary memorandum submitted by
HM Customs & Excise
Questions 87-88 (Mr Trickett):
The way the VAT system is structured makes comparison
of VAT yield against the general population for individual geographical
regions difficult. Each trader is registered for VAT in a single
region even if it collects VAT from the whole country. So for
example a very large retailer may be registered in the London
region and all VAT receipts for that company will be shown against
London even though much of this VAT will have been paid by consumers
in other parts of the UK.
The VAT Gap calculation itself is reported at
a national level only, as the VAT Theoretical Tax Liability is
currently only calculated on a national basis. We are working
with our analysts to identify ways to break the calculations down
further and this may eventually include a regional breakdown.
However we do monitor and analyse patterns of VAT receipts at
a number of levels including region, trade sector and size of
business. We also use a number of other compliance indicators,
which enable us to monitor compliance and target VAT risks on
a regional and trade sector basis.
Question 143 (Mr Jenkins):
Customs' Annual Report and Accounts for 2003-04,
published in December 2004, show that in 2003-04 Customs detected
2,043 commercial vehicles misusing illicit fuel, although this
will include commercial vehicles other than HGVs.
Customs' sanctions policy states that when detected
misusing illicit fuels commercial vehicles should be seized together
with the fuel in their tanks. These vehicles should then be restored
in accordance with the following scale:
— First offence—100% of
revenue evaded plus non-rebated value of fuel in the tank plus
any storage costs incurred by the Department or the value
of the vehicle whichever is the lower.
— Second offence—200%
of revenue evaded plus non-rebated value of fuel in the tank plus
any storage costs incurred by the Department or the value
of the vehicle whichever is the lower.
— Third offence—non-restoration.
In addition, civil penalties of £250 should
be issued for taking in and/or using rebated fuels for use in
road vehicles. A visit should be made to the trader and an audit
carried out to determine the history of fuel purchases and usage
in the previous three years (or since the previous detection,
whichever is the most recent). On the basis of this audit an assessment
should be raised for the revenue evaded.
Finally, for repeat offenders who have failed
to respond to other sanctions Customs will consider prosecution.
It should be noted, however, that officers will
always act in accordance with the principles of proportionality.
There may therefore be a limited number of instances within the
figures above where the vehicle was not seized.
Question 157 (Mr Davidson):
Customs do receive full co-operation from the
oil companies who have bases in the Republic of Ireland, although
as they are multinationals we will tend to deal with the UK end
of the operation in practice.
22 February 2005
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