Suspected VAT Fraud
HMRC have issued a new notice which is concerned with suspected VAT fraud and in particular, Missing Trader Intra-Community (MTIC) fraud. This ‘Carousel’ fraud has dealt a substantial blow to HMRC’s VAT receipts over the last number of years.
The notice describes the process that HRMC will follow where they suspect that fraudulent activity has occurred. Firstly, HMRC will request that the taxpayer and his/her adviser attends a meeting where the taxpayer will be given the opportunity to disclose any indirect tax irregularities. HMRC on their part will give the taxpayer reason to explain if there is an any explanation for the suspected irregularities.
Whilst it is not incumbent to co-operate with any enquiry, assistance from the taxpayer is likely to reduce the amount of penalties due. The penalties can be as high as 100% of tax underpaid or over claimed.
After the investigation has been concluded, HMRC will write to inform the business if a civil evasion penalty has been levied and if so the amount of tax, interest and penalties due. The taxpayer can appeal the decision by requesting a reconsideration or by appealing directly to the Tribunal.