Companies forced to police VAT scams
Fresh reports suggest that IT companies are being forced to police their own supply chains for cases of VAT fraud because Customs & Excise cannot do it itself.
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’.