BB/10/06 VAT—implementation of changes to VAT accounting rules (“reverse charge”) for businesses trading in mobile telephones, computer chips and certain other goods; and further consultation with affected businesses
Business Brief, Issue 10. 19 July 2006
Who needs to read this?
Businesses buying and selling any of the following goods—
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— mobile telephones
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— computer chips/microprocessors/central processing units
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— electronic storage medium which may be used in, or in connection with, computers, or any device in categories 1 and 4
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— electronic devices used for the storage, processing or recording of electronic data as follows—
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(a) handheld devices for recording or playing of sound and or images
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(b) handheld computers
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(c) handheld communication devices other than mobile telephones
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(d) positional determination devices for GPS system
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(e) games consoles with screen, or of a kind used with a television or computer
Background
Missing trader intra-community (MTIC) fraud, also known as carousel fraud, is a sophisticated criminal attack on the UK VAT system, which in 2004/05 is estimated to have cost between £1.12 and £1.9bn. The fraud is largely perpetrated using goods such as mobile phones and computer chips, but also includes other electronic goods. It involves goods imported VAT-free from other EU member states being sold through contrived business-to-business transaction chains in the UK, and subsequently exported. The tax loss occurs when the VAT charged on the initial sale of the
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