24 Aug 2010 12:08:02
HMRC to reintroduce VAT on carbon allowances
VAT will be reintroduced on carbon emissions allowances from this November, Her Majesties Revenue and Customs (HMRC) has announced.
The tax was reduced to zero on allowances in July 2009 in response to the levels of carousel fraud within the industry before European Union-wide measures were put in place.
A directive was issued in March which allows member states to overturn this rate.
"This move was always intended as an interim measure until the legislation necessary to introduce a reverse charge could be put in place," BusinessGreen quotes a HMRC spokesperson as stating.
The practice of carousel fraud involves firms buying emissions in one country without paying tax, then adding the cost of tax and selling it on in another country, while taking the cash from the difference in price themselves.
Some 30 arrests have already taken place across a number of countries, including Spain, Norway, Denmark, Belgium, the Netherlands, the Czech Republic and Cyprus, in relation to such schemes.