Commentary

V7.320 Fraud—are your overseas customers genuine?

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.320 Fraud—are your overseas customers genuine?

Part V7 Tax planning | Commentary

V7.320 Fraud—are your overseas customers genuine?

As a final point, be aware that HMRC has two other powers to deter the activities of companies it believes could be involved in illegal supply chains. Firstly, it can ask for security (an up-front payment or guarantee) from businesses that constantly trade with other companies that go missing or become insolvent, leaving VAT unpaid. Secondly, it has the power to deny input tax for any business involved in the commodities listed if a proper tax invoice is not held. This effectively denies companies the benefit of proving an input tax claim with other supporting documentation.

Keeping records for VAT purposes is not just about retaining copies of sales and purchase invoices. In the age of the global economy, there is a burden on taxpayers to keep a wide range of records and seek information from both customers and suppliers, often before a deal is completed.

Online marketplaces

HMRC announced a second prong to its armoury against online VAT evasion at the Spring Budget in 2017 where it announced that it is to extend the joint and several liability provisions of VATA 1994, s 77 to make online marketplaces jointly and severally liable for

  1.  

    •     any future VAT that a UK business selling goods via the online marketplace fails to account for once they have been notified by HMRC, and

  2.  

    •     any VAT that an overseas business selling goods via the online marketplace fails to account for where that online marketplace knew or should

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