The European Union Council of Ministers has authorised the Netherlands to derogate from standard VAT law for the ready-to-wear clothing industry, and shift the obligation to pay sales tax from clothing firm sub-contractors to their contractors.

The aim of this temporary reform - which would last until December 2009 - is, said council minutes: "Preventing fraud in a sector in which collecting VAT is rendered awkward by the difficulty of identifying and supervising the activities of subcontractors."

By Keith Nuthall.