VAT fraud, including Carousel Fraud and MTIC fraud, are usually highly complex. If you are under investigation for VAT fraud, contact the specialist fraud lawyers at Qamar Solicitors who are highly experienced in advising clients facing fraud investigations.
UK businesses that are VAT registered are effectively tax collectors for the Government. The temptation to avoid repaying this tax to the Government is clear, but to do so is a criminal offence attracting severe penalties. VAT fraud is investigated by specialist HMRC teams. Under section 72 Value Added Tax Act 1974 the following are criminal offences:
Fraudulent evasion of VAT
False statements for VAT purposes
Conduct amounting to an offence
Charges can also be brought under the Fraud Act 2006.
What is VAT fraud?
Tax evasion is the most common type of VAT fraud. If VAT evasion involves professionals it will be investigated as criminal fraud. VAT evasion takes place where there is an intentional non-payment when VAT is due; or when a defendant has paid too little or claimed back too much VAT.
Typical of VAT fraud is the falsification of invoices to make it appear genuine. A common issue is establishing the identities of parties involved in the business’s invoicing process. There can be a complex paper trail of evidence requiring expert lawyers to pick through.
Another type of VAT fraud is Carousel Fraud (also known as Missing Trader Intra-Community (MTIC) fraud) which is complex and essentially involves small, small high value goods such as smartphones or computer chips, and a chain a companies who deal in large quantities of these goods. They are imported free of VAT from a company based in the EU, sold on VAT free to a UK company which then charges VAT. In some instances, the goods are exported back to the EU where the exporter then reclaims VAT from HMRC.
To get a conviction, the prosecution needs to prove that there was an agreement between the parties involved in the fraudulent transactions to falsely reclaim VAT and that they are connected to the companies. This is often extremely difficult, and eventual charges are frequently conspiracy to defraud.
Serous VAT fraud can attract a prison sentence of up to 10 years, and convictions for carousel fraud typically attract a lesser prison sentence. Proceedings under the Proceeds of Crime Act (POCA) can also follow – and the amount of VAT avoided will have to be repaid to HMRC.
How can we help?
If you are being investigated or prosecuted for VAT fraud, contact the fraud and regulatory lawyers at Qamar Solicitors immediately for urgent specialist legal advice. We can assist you early in the investigation and it is imperative you contact us as soon as possible.