Errors, avoidance and fraud relating to VAT costs the Exchequer between an estimated £7.1bn and £10.2bn per year. Businesses that deal innocently with VAT fraudsters can be held liable for unpaid VAT arising out of missing trader fraud, a type of fraud estimated to cost between £1.7bn and £2.6bn per year.
The battle against missing trader fraud is a top priority for Customs, with 1,000 new officers to be deployed to fight it in the three years to 2005/6. This is further reflected in two legal developments which have effectively shifted the losses incurred by the Exchequer to the business purse. In the process, innocent traders stand to make losses that may well be serious enough to put them out of business.
