Companies forced to police VAT scams

Link: Landmark victory sets VAT precedent

Missing trader fraud, which involves traders importing VAT-free mobile phone and computer parts and then holding onto the VAT instead of handing it over to the Treasury, is believed to have cost the government £2.5bn in lost revenues last year.

Under a new law, businesses can now be held jointly and severally liable for the missing VAT even if they did not know the goods they received were part of a scam.

In effect, the problem has now been outsourced to the companies themselves who would, otherwise, face the threat of extra VAT bills as a result of not uncovering the deception of illegal suppliers.

The Financial Times reported James Bullock, head of tax litigation at KLegal, as saying this new requirement would be a ‘big extra burden on legitimate traders’.

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