TaxCorporate TaxCompanies forced to police VAT scams

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.

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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