Saturday, August 27th, 2016
VAT MTIC fraud continues to mutate to different trade sectors. HMRC successfully prevented VAT MTIC fraud in the mobile phone and computer industry by implementing ‘reverse charge’ for VAT. The fraudsters are then known to have moved into the alcohol trade where carousel or cover load fraud provides a benefit of not only the VAT but also excise duty both of which remain unpaid. However, the latest trends seem to indicate the fraudsters have moved into the confectionery trade where it has been seen that large volumes of Mars Bars, Snickers and other items of confectionery have been on the move in and out of the EU.
The essential elements of VAT MTIC fraud are that a taxable person acquires goods from another EU Member State free of VAT, fails to fulfil his obligation to declare and pay the VAT to HMRC and subsequently disappears (becoming a ‘missing trader’ in HMRC parlance). The missing trader deliberately disrupts the smooth running of cross border VAT systems in place. The goods then progress through a supply chain where the goods may once again be exported to the EU.
We are aware that HMRC, by making enquiries up and down the supply chain and questioning traders of the integrity of the supply chain, are testing the credibility of supply chains. It is important that traders who operate within the confectionery trade sector should be aware that it is important to maintain good due diligence on their suppliers and customers.
Please do not hesitate to contact this office, if you require further advice with regard to due diligence.