Treasury officials are concerned about the loss of revenue due to criminals who have been avoiding payment of VAT on vehicles coming in to the U.K. According to Treasury Secretary David Gauke, they have been able to get around the current manual system, and the plan is to have everything computerized with a mandatory online notification of any vehicle brought into the country for use on U.K. roads.
A consultation in now underway at HMRC in cooperation with DVLA to determine the best way to set up an online system that will ensure VAT gets paid in the full amount and on time. The new system, which is set to go into effect in 2013, is supposed to prevent this sort of VAT-fraud and thereby bring an additional £125m to the Treasury in the first year, according to Gauke.
The updated procedure will allow the DVLA to get immediate notification of the VAT status of each vehicle; if no payment has been made or there is reason to believe the vehicle’s owner may try to avoid paying, DVLA will not register that vehicle. Richard Bysouth of HMRC said that they are inviting input from people who are bringing in road vehicles for either private or business purposes.
The expectation is that with this online system, it will be almost impossible for anyone to get out of paying the allotted amount of tax, and drastically reduce or eliminate the ongoing fraud. It is also meant to make the process simpler for everyone. The consultation is designed to inform all interested parties of the new procedure and work out the best way of implementing it.