VAT cheats stole 12.6 billion euros, nearly 8.5 billion pounds, from the Treasury in the year to June, five times more than any other European Union country, the BBC said, citing a Belgian report.

The Treasury, which put Value Added Tax fraud in the country at 1.9 billion pounds in the year to June 2005, said it did not recognise the figure and would be publishing its own new estimates later this year.

The Belgian figures covering the 12 months to June 2006 come from a group known as Cellule de Soutien or Ondersteuningscel and mostly concern so called carousel fraud in which the culprits repeatedly import and export the same high value goods.

The importing fraudsters pocket the 17.5 percent VAT that is supposed to be handed to the Treasury and then compound the offence by reclaiming it again when they export the goods to a non EU country like Dubai before sending them back to the EU and onto the carousel again.

The Belgian report cited in Thursday's Panorama programme, said three quarters of the VAT fraud in Britain was carousel fraud using Dubai as the link.

It said VAT fraud in Spain in the year to June 2006 was 2.6 billion euros (1.8 billion pounds), 2.3 billion (1.5 billion pounds) in Italy, 1.9 billion (1.3 billion pounds) in Germany and 1.5 billion euros (1 billion pounds) in France.

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