Mr. Brown, have you already gotten to know the new Government? What are your first impressions?
- I would say that they are very favourable. The “Borissov” cabinet is supporting reforms in revenue administration, including the State Receivables Collection Agency (SRCA) which is to be merged with the National Revenue Agency (NRA).

We will speak about the NRA and the SRCA a bit later. But before that would you please tell me what, in your opinion, will be the effect of the customs reform started by the new Government? Why the agency is being restructured right now but not earlier or later?
- No customs service or any state organ can stay static. The process of change must happen continually – world trade changes, customs have to change with it. For example, before you joined the EU you had a map of customs borders which is now changed.

What are your recommendations regarding the new Government’s work in the area of revenue administration? Is what is currently being done (restructuring of agencies) enough?
- You cannot just implement a large number of reforms immediately. Change takes time. People will have to get used to change – not only the customs people, where offices close down, but the traders and the importers.

Well, if these things take time, and you have been here since 2001 (or 9 years) let’s speak realistically: what has changed since then, what concrete results have been achieved to justify the more than 80 million BGN spent for the four contracts with “The Agents of the Crown”?
- If you look at the wall behind you will see a picture of all the people, who assisted with setting up the mobile teams. Part of the money that the Government paid to Crown Agents were not only paid for the experts’ salaries but also paid for all the vehicles, all the uniforms, all the extra moneys. We also set up an analytical section within the Intelligence in Customs.
What exactly does this unit analyse?
It analyses various threats to the customs or the tax base of Bulgaria. I want to stress that we do not solely function in Customs any more, for the last two years we have also been working in the NRA. We are assisting the NRA “Risk Analysis” Directorate to improve the way they target VAT traders. In the Customs and in the NRA the attention should be focused on traders, individuals and companies that are not compliant with the law. And the companies that do comply with their obligations should have less interference from the state.

But it is clear that VAT and customs frauds cannot be committed without the involvement of “insiders” from the different agencies. Shouldn’t the efforts be focused on that? The Customs, for example, are still the most corrupt state unit…
- I have no executive authority to arrest people, neither any of my staff! I give advice of how to put good controls in place to reduce the opportunities for fraud. On occasions when frauds or irregularities are discovered they have to be handed to the competent authorities.

What is the progress regarding those 72 recommendations for reforms in the customs administration? How have they helped for enhancement of controls in the Customs?
- That’s up to the management of the Customs. I can give them advice on what checks to do on their officers. But it wasn’t just 72 reforms in Customs. These were a number of recommendations for improvement across the whole revenue administration. These 72 initial recommendations reflect the areas in which Crown Agents works to support the revenue administration. Since then we have been going through these areas, making more recommendations to improve.

So they are already being implemented, is this correct?
- I am quite sure that if you spoke to the management of the NRA and the Customs they will tell you “Yes, they are in various stages of implementation.”

But I am asking you?
- We try, as far as we can, to check that the recommendations are being implemented but, in a lot of instances, we cannot physically do it, it has to be the agency that implements. I report to the Ministry of Finance, they are the client. And by the end of January I will report to Minister Dyankov my impression of the stage of implementation of the recommendations for the last quarter.

And what is the progress, I am sure you already have an idea?
- Various items have been progressed but my senior advisors have to come back to me after they speak to their counterparts.

Regarding the financial crisis and the difficulties in revenue collection, what is the most important thing for the NCA and the NRA now?
- They have to continue to improve revenue collection, they have to be more effective, to use risk analyses. What is the point of checking someone who has complied with the law continually?

Speaking about this, what is your evaluation of the amendments to tax laws, approved by the Parliament? What do you think about the intention of connecting each cash register with the NRA? Is this also aimed at better risk analysis and isn’t it better to apply this measure only for the cash registers of the big companies?
- Yes, this is an additional form of control that reduces the opportunity for malpractice.

However, should it be applied for each company, even the small shops?
- Personally, I don’t think it needs to be applied across the board, that’s my own personal view. It is a good control, indeed, but you have to have better understanding of the trader you are dealing with. There should be a very good history if it’s a VAT payer or a customs payer.

According to the latest amendments to the Excise and Tax Warehouses Act, all cigarette traders have to be VAT registered. Do you think that this would cause serious difficulties in the NRA and also for the traders? According to many people, this might increase smuggling.
- You cannot stop smuggling. There will always be smuggling. The objective is to control the amount of smuggling. If the imposition of specific tobacco licenses helps reduce the sale of smuggled cigarettes that’s good. What needs to happen in this country is that when an outlet is detected selling smuggled cigarettes then the cigarettes should be ceased and the owners prosecuted, and if the revenue loss is quite serious then the penalties should reflect this, which may even mean sending people to jail.

Well, isn’t this the current practice?
- Have you heard of such cases, I haven’t? I haven’t read anything in the newspapers about that.

The NCA often announces about detected smuggling…
- Customs are not responsible for investigating, there are other state agencies responsible there.

E.g. they do not do their job, is this correct?
- No, they do their job. Customs are not responsible for taking an investigation forward, they detect frauds and then they hand the case over to the Ministry of Interior. That is why we set up a Fiscal Crime Coordination Group, which is now being chaired by the Ministry of Finance. This group includes representatives of the NCA, the NRA, Economic Police, Border Police, the State Agency for National Security (SANS), the Chief Directorate for Combating Organised Crime, Prosecutor’s Office. The objective of this group is to determine the biggest fiscal threats to revenue and to task operational people from each respective agency to deal with those threats. This is to better target state resources.

Is a new contract with Crown Agents or an extension of the current one planned?
- We have not entered any discussions with the Government. We will look at what we have achieved and I am sure that Crown Agents will discuss this with the Minister or the Government in due course. I will love to stay in Bulgaria, I like Sofia, I like Bulgaria. There about 4-5 marriages between our advisors and Bulgarian women, and over the years there are three children. But speaking seriously, it all depends on what the Government wants at the time, provided they are satisfied with what we are doing and still need us.

How do you evaluate the work of Vanyo Tanov as DG of the NCA? I have read, somewhere in the press, that he would not support signing of a new contract?
- I get on very well with general Tanov, I have not discussed any contractual matters with him. At my last meeting with the general I was having problems, some of my staff had problems organising a training course, and the general dealt with this immediately. He also asked for assistance in specific areas which has been provided.

Which areas?
- At this moment in time he is under tremendous pressure, he is trying to undertake a major reorganisation in Customs, while at the same time maintain or increase revenue collection levels. This is a massive responsibility.
Reform has to be continuous. By the way, the next major reform is the Schengen accession, which will mainly affect the Border Police.

Are you going to assist in this reform?
- No. This is a matter for the Ministry of Interior. From a Crown Agents point of view we are about to deliver some training to the Border Police and the Economic Police. It will be based on customs documentation and procedures, to help them better understand the import and export of goods across borders.

Then let’s go back to the reorganisation of the revenue administration. For example, do you think that the State Receivables Agency has to be merged with the NRA right now? The previous Government postponed this reform because of the crisis.
- Merger can happen whenever it suits the Government. There will always be reasons not to do something. It should not threaten at all the effectiveness of the NRA. The new Head of the SRCA is a former NRA director. As long as that aspect of the NRA does its job, meets its goals then there will be nothing wrong.

Does this mean that the SRCA does not do its job very well and that is why it has to become part of the NRA?
- No, this is not necessary. It is part of an overall rationalisation by the current Government. Just because something has changed this does not mean it didn’t work.

Some time ago you mentioned that a major part of your work, especially under the previous contracts, was aimed at decreasing VAT-frauds.
Can you tell a bit more and give concrete examples of fraud schemes?
- At the moment we are assisting the NRA in looking at VAT registrations, assisting them in identifying possible fraudulent attempts at registering for VAT. Crown Agents have supplied a car and a full-time advisor to work with NRA staff and an Economic police officer. They physically go to premises to look at VAT applications. This is to stop the so called carousel frauds. The principle of these frauds is as follows: a fictitious company registers for VAT and then the company would inflate the price and obviously the value for VAT through fictitious transactions and then submit a claim for a refund for VAT and then disappear. And remember the NRA can’t go and visit every company that requests a refund. So we are helping the NRA identify possible fraudulent traders applying for a VAT registration before they have any chance to commit a fraud.

The new Government obligated all the cigarette traders to be VAT registered, therefore the number of applications will increase drastically – only in Sofia there will be over 30 000 new registrations?
- So the system will have to change. There may be more than one team, the NRA has to decide how to address this. Back to what I said earlier, you have to use risk analysis. There is enough history data known about companies in Bulgaria.

The interview was taken by Ralitsa Peytcheva