For a number of years Customs and Excise have been aware that an increasing number of businesses, in particular the larger taxpayers, obtain tax benefits through measures which have little or no commercial purpose other than to avoid VAT. However, a grey area exists between avoidance (which in principle is legal) and evasion (which is illegal), complex issues are involved and the position is constantly changing. In this report the National Audit Office examined the Department's arrangements for identifying, evaluating and countering VAT avoidance. The main findings are presented together with suggestions for further action.
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