TaxAdministrationLegitimate businesses affected by VAT crackdown

Legitimate businesses affected by VAT crackdown

Delay in registrations prevents businesses from claiming VAT - which cannot be reclaimed later

Accountants and the Lords have put pressure on HM
Revenue & Customs
to explain why its battle against tax fraudsters is
affecting thousands of legitimate businesses that are trying to pay their tax.

The Lords European Union Committee is set to publish its report on
carousel fraud on Friday, which newspapers such as the
Daily Telegraph say is costing the country as much as £3bn per year.

The Institute of Chartered Accountants of
England & Wales
has criticised the government for its part in the
crackdown, which has caused ‘massive delays’ in VAT registrations. This has
meant millions of VAT repayments are withheld because of fraud checks by some
700 HMRC officers.

The ICAEW said the registration delay is preventing businesses from
collecting VAT from customers, which cannot be claimed back later.

An HMRC spokesman said, however, that 95% of registrations were taking ‘under
30 days’ to process.

Further reading:

VAT registrations up for sale to fraudsters

Carousel fraud delays VAT registrations

Carousel fraud measure set to hand Treasury
half a billion

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