Examination of Witnesses (Questions 100
- 112)
WEDNESDAY 10 JANUARY 2007
MR RUDY
VOLDERS AND
MR YANNIC
HULOT
Q100 Chairman:
Not quite, except that both systems are subject to fraud because
you have tried it.
Mr Hulot: With the reverse charge the fraud
will be at the retail side.
Mr Volders: At the end.
Q101 Chairman:
You are moving the fraud around?
Mr Volders: The risk is moving to the retailer.
Mr Hulot: With carousel fraud you have a small
group which specialises in this fraud but with the reverse charge
you have many, many fraudulent companies. It is impossible to
handle it. If you have a big problem, after you have a very big
problem, it is very difficult to comprehend.
Lord Cobbold: Does this mean that we
need a complete rehash of the VAT system?
Chairman: Go to an origin system.
Q102 Lord Cobbold:
Sales tax or whatever.
Mr Hulot: No, because you have other typologies,
for example the definitive regime. It is very dangerous. In your
company you have one invoice from Bulgaria and you have to say
in one or two weeks if you can make the reimbursement. If you
try to have contact with Bulgaria it is impossible to read what
you have on the invoice, it is another alphabet, and you have
to contact the anti-fraud unit in Bulgaria and ask, "Is it
possible that you have £1 million on this invoice" and
you have to answer within 10 days, which is impossible with the
system of international co-operation now.
Q103 Lord Kerr of Kinlochard:
You would not favour a move to an origin system because of the
difficulty of trusting?
Mr Hulot: At this stage of international co-operation
it is impossible. You have to reinforce the possibilities of direct
exchanges and control and so on.
Q104 Lord Watson of Richmond:
You were talking about the difficulty of getting responses from
Germany and the United Kingdom. In terms of the new Member States—Bulgaria
and Romania—have you established contact with them or not?
Mr Hulot: Yes, we did immediately. In the last
quarter of last year they contacted us and asked us to visit and
in February we will go to Bucharest and Sofia to make them—
Q105 Lord Watson of Richmond:
That is reassuring.
Mr Volders: It was also the politics to co-operate.
These new Members must immediately co-operate. I have visited
Lithuania and their exchange programmes for information are performing
better than the Belgians.
Mr Hulot: There will be members from the network
at this moment.
Mr Volders: They have invested in new ICT, so
they are the best performing machines.
Q106 Lord Watson of Richmond:
That is the most reassuring thing I have heard this morning.
Mr Hulot: It means that by now they will receive
all suspect transactions in the direction of their country from
all the other Member States.
Q107 Chairman:
I am personally most grateful for your help on the technical side
because it has managed to knock on the head one or two ideas we
were nursing about the technicalities of dealing with fraud. I
have deliberately not sought to seek answers from either of you
on the purely political questions because had Mr Jamar been here
it would have been proper to ask him, but it is not quite proper
to put those to you. We are meeting Eurostat at 11.30 so I am
afraid we probably need to despair of Mr Jamar but, on the other
hand, perhaps we might correspond with him.
Mr Hulot: No problem at all.
Lord Watson of Richmond: And with you,
Mr Hulot.
Q108 Chairman:
This technical information is most useful. We are very grateful
for both of these reports which we had not seen. We can ask more
questions, if we may, in writing.
Mr Hulot: You can ask more questions at the
technical level and also at the political level.
Chairman: The technical level is extremely
helpful.
Q109 Lord Watson of Richmond:
You are aware that the European Parliament is also now going to
carry out an investigation into carousel fraud.
Mr Hulot: The Economic Committee.
Q110 Chairman:
I would still like to talk to the technical practitioners.
Mr Volders: Just as an example, we had an amazing
VAT fraud in mineral oils beginning in 2000 and what did we do?
We co-operated with the economic enterprises and there are two
federations of petrol oil in Belgium and the Netherlands. All
of the petrol oil comes from Rotterdam and is sent to Belgium.
We have done a protocol between the two organisations, the two
countries, to give all information when there is a tanker that
is leaving Rotterdam, the Belgian authority is informed and vice
versa, reciprocity. There are now no mineral oil frauds because
we know everything. That ship must arrive there and if it does
not arrive we have a problem. We have not detected another construction
of VAT fraud in the mineral oil area with this simple agreement
between two federations. When I say it was €300 million in
2000 and we have estimated that because of the detection of fraud
we have eliminated it to zero and we can say there is now €300
million in the Treasury for Belgium.
Q111 Chairman:
Some number.
Mr Volders: That was just with this agreement.
This was what Mr Hulot said also. All the Directives and Regulations
for the exchange of information are already implemented but we
must do it.
Q112 Chairman:
That is a useful answer.
Mr Volders: How can we do it, we have a contact
point like we have with Mr Simon Felderman, and now you have a
contact point with Mr Hulot. That is the only thing, we must know
each other and have confidence in each other.
Chairman: That is entirely right.
Lord Watson of Richmond: That is something
we could help to facilitate. I have given you one name from that
newspaper report from the Revenue service.
Chairman: Thank you very much indeed.
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