APPENDIX 4: LETTER DATED 28 NOVEMBER 2012
FROM LORD BOSWELL OF AYNHO TO THE CHANCELLOR OF THE EXCHEQUER
Select Committee inquiry into fraud against the EU's
finances
I write to seek the Government's co-operation with
our inquiry into combating fraud against the EU's finances. I
am exceptionally disappointed to have to write this letter.
During the course of its inquiry into fraud against
the EU's finances, our Sub-Committee on Justice, Institutions
and Consumer Protection has become aware that one key area of
concern is the extent of VAT fraud. Indeed, Professor John
Spencer who appeared before the Sub-Committee on 31 October, said:
"it seems to me that one of the reasons why we get so much
VAT fraud is that it is a consequence of the way that the VAT
system operates … the basis of carousel fraud is the repayment
of VAT when goods cross the border, and the non-payment of VAT
further up the chain is then reclaimed on the basis that it has
been paid. If we altered that, and indeed some of the other ways
in which the taxes that fund the European Union were collected,
we would reduce the amount of fraud" (italics added).
As part of the inquiry, Members of the Sub-Committee
visited Brussels and met representatives from key EU institutions
including the Commission, OLAF and EUROJUST; and MEPs on key committees
including the Special Committee on Organised Crime, the Legal
Affairs Committee and the Budgetary Control Committee. In all
of these sessions, the extent of VAT fraud as a problem throughout
the EU arose time and again.
In an effort (i) to assist the Sub-Committee with
its understanding of carousel fraud; (ii) to try to gauge the
level of the problem in the UK from the viewpoint of the key national
institution dealing with VAT; and (iii) to offer HMRC an opportunity
to put on the record its view that VAT fraud is not fraud against
the EU's finances, our secretariat requested the attendance of
an HMRC or HMT official at an evidence session on 21 November.
A separate request was also made for the Financial
Secretary to the Treasury to give evidence at the end of December
on the general issues raised by the inquiry. The secretariat provided
ample information about the oral evidence session with officials,
including, having received reassurances that an official would
appear, a list of possible questions. However, on Friday 16 November
the HMT Parliamentary Unit advised that they declined to send
any officials or a Minister to give oral evidence.
The Sub-Committee is extremely concerned at this
behaviour. The Government has a duty to assist Select Committees
of Parliament. Please confirm that a Treasury Minister, accompanied
by relevant officials, will be available to the Sub-Committee
at a date and time to be agreed, before the completion of the
inquiry in mid-January.
I am copying this letter to the Rt Hon Lord Strathclyde,
Leader of the House of Lords; and Lord Sewel, Chairman of Committees.
| 
