Traders angry at VAT delays by HMRC

Hundreds of businesses are being pushed to the brink of liquidation because
officials are withholding VAT repayments as part of the fight against carousel
fraud.

Trade organisation the Federation of
Technological Industries (FTI) is seeking a judicial review on
behalf of genuine traders, which it says are being unfairly penalised by
HM Revenue & Customs
officials, The FT
reports.

The body claims the VAT repayments owed to traders could run into billions of
pounds. VAT repayments are normally due within 30 days, but have been delayed
for as long as 12 months as officials carry out ‘extended verification’ checks.

The government has conducted the checks to counter carousel fraud, and has
had some success with figures showing that the scourge, estimated to cost the
Treasury between £3.5bn and £4.75bn in 2005/2006.

The FTI, however, claims the VAT delays are ‘unlawful, disruptive and
predmeditated’. The FTI says is knows of at least 300 businesses waiting for
more than £1bn of repayments.

HMRC counters that its checks are proportionate and that its verification
procedures have been vindicated by a reduction in carousel fraud.

Further reading:

France delays Brown’s VAT fraud move

Carousel fraudster jailed for 15 years

Northern carousel scams cause UK fraud to rocket