VAT fraud ― overview

Produced by Tolley

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

  • VAT fraud ― overview
  • Common types of VAT fraud
  • Businesses who deliberately fail to register
  • Suppressing sales and / or purchases
  • False invoicing
  • Manipulating liabilities and accounting schemes
  • Missing trader fraud
  • Labour provider fraud
  • Application of the domestic reverse charge to specific transactions
  • Smuggled goods
  • More...

VAT fraud ― overview

This guidance note provides an overview of the most common types of VAT fraud that can be committed and how a potential fraud will be investigated by HMRC.

Common types of VAT fraud

The most common types of VAT fraud are:

  1. businesses trading over the VAT registration threshold that deliberately fail to register

  2. the suppression of sales and / or purchases

  3. false invoicing

  4. the manipulation of VAT liabilities and accounting schemes

  5. missing trader fraud

  6. labour provider fraud

  7. smuggling goods

VATF10000

Businesses who deliberately fail to register

A taxable person is a business who is either making or intending to make taxable supplies in the UK, distance sales in the UK, or relevant EU acquisitions of goods in Northern Ireland, and may be liable to be registered for VAT or be entitled to register for VAT. If a person is liable to be registered for VAT and deliberately fails to register, they are committing fraud.

Also, if a person is not registered for VAT and is in business and they charge VAT on supplies of goods and services and this VAT is not accounted for to HMRC, the person is committing fraud.

Please see the VAT registration and deregistration ― overview, Overseas business ― registering for VAT in the UK and Penalties ― VAT wrongdoing guidance notes for more information.

Suppressing sales and / or purchases

This is a simple form of VAT fraud and is commonly used in sectors that have a higher number of cash sales; but any type of business can be involved

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