Annex E
CONSULTATION WITH BUSINESS ABOUT PROPOSED
REFORMS TO THE EU VAT SYSTEM
HMRC have consulted with businesses on action
to combat VAT fraud. Businesses generally have commented that
action should be targeted at the fraudsters and should not impose
burdens on legitimate businesses. Some have stated that the current
arrangements for intra-community movements of goods, which are
effectively VAT-free, represents a facilitation to trade engaged
in cross border supplies and should be retained. Overall most
businesses that commented did not see the need for a fundamental
change to the VAT system that worked perfectly well for the vast
majority of companies engaged in cross border trade.
Many businesses were aware of suggestions by
some Member States for a wide reverse charge that would affect
all goods and services above a certain threshold. Most that commented
were deeply concerned at the comprehensive reporting requirements
that accompanied the system and the additional costs involved.
For similar reasons the Government has not seen any significant
support for the type of "modified origin system" proposed
by the Commission although some businesses have historically supported
an origin system where governments undertake all the necessary
redistribution and refunds of tax associated with the regime.
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