UK scraps carbon VAT to tackle fraud

The UK government has moved to tackle VAT fraud on carbon credits by removing VAT from emission allowances.

The new law, which takes effect from midnight tonight, follows concerns that fraudsters are using carbon trading to steal VAT revenues from the UK. The change will prevent fraudsters from charging and collecting VAT and then not paying it to HM Revenue & Customs (HMRC).

In the UK, where the majority of carbon trading takes place in Europe, any exchange-based trade of carbon credits are already treated with a zero-rate of VAT, but today's move gives a zero-rating of VAT on all over-the-counter

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