Missing trader intra-community fraud (MTIC)

Produced by Tolley
Missing trader intra-community fraud (MTIC)

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Missing trader intra-community fraud (MTIC)
  • MTIC VAT fraud
  • Specified goods
  • Parties involved in MTIC fraud
  • Types of MTIC fraud
  • Disallowing input tax
  • Reasonable grounds to suspect
  • Rebuttable presumptions
  • Joint and several liability
  • Applying joint and several liability
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note provides an overview of what constitutes MTIC fraud and the action that can be taken by HMRC to combat this type of fraud. This note should be read in conjunction with the MTIC fraud ― application of the domestic reverse charge for mobile phones and computer chips and Domestic reverse charge guidance notes.

The UK has also introduced several domestic reverse charge measures and details of these can be found in the Domestic reverse charge ― wholesale trading in electricity, gas and electronic communications services and construction labour and Supplies of non-investment gold guidance notes.

MTIC VAT fraud

MTIC fraud basically works when a supply chain is created and, at some stage, a key player in the supply chain disappears. The chain normally involves goods being purchased from a supplier in another EU country, who does not charge VAT to the UK customer because the business is given the customer’s UK VAT number. The business acquiring the goods from the EU supplier normally sells the goods onto another UK company and charges VAT but fails to pay this output VAT to HMRC. Please note that services can also be subject to MTIC fraud as well.

HMRC has introduced a number of measures to try to tackle this fraud, which are covered in more detail later in this guidance note:

  1. introduction of joint and several liability

  2. disallowing input tax

HMRC has also introduced a reverse charge provision which affects UK traders selling certain high-risk goods in the UK. More information can

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