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New C&E guides to help avoid VAT fraud

UK Customs and Excise (C&E) have released two new guides to help business avoid being caught in VAT fraud through their suppliers. Under changes to 'missing trader intra-community fraud' (MTIC), announced in April, businesses buying and selling phones, computers or IT equipment will be held jointly responsible if a firm in their supply chain fails to pay value added tax (VAT) on goods entering the UK.

According to C&E, MTIC fraud happens when a firm registers for VAT in order to purchase goods VAT-free from an EU member state, then sells them at a VAT-inclusive price in the UK.

The practice is a lucrative one for the companies involved, but C&E says it distorts competition and can force legitimate traders out of business.

Under the new rules, announced in the Budget, businesses linked to VAT fraudsters will be given 21 days to prove that they were unaware that criminal activity was taking place. Those that fail to do so will share the VAT costs between them.

The guides were published following a two-month consultation. For more information visit: www.hmce.gov.uk/business

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