HMRC probes VAT import fraud

Thu 30th Aug 2018

The UK’s HMRC has launched a review into non-VAT registered importers of goods into the UK.

It is looking to survey the numbers of businesses bringing goods into the country without a UK VAT registration to help understand if it can reduce the estimated £1.5billion in VAT fraud. Whilst it is not obligatory to have a UK VAT number to settle the import VAT bill, HMRC believes not having a number may indicate onward domestic supplies which do require a UK VAT registration to declare and pay the sales VAT. HMRC has hired an independent research company, IFF Research. It will contact a random sample of VAT unregistered businesses for telephone surveys between August and December 2018.

Other measures the UK has introduced to help reduce VAT fraud in the e-commerce sector include:

  • The Fulfillment House Due Diligence scheme, which requires all
  • Making e-commerce marketplaces jointly and severally liable for unpaid VAT by UK and foreign merchants on their platforms.  This extends the existing liability from non-EU merchants to catch those establishing ‘shell’ companies in the UK.
  • Making e-commerce marketplaces jointly and severally liable to unpaid VAT if a platform knew, or should have known, a merchant should be VAT registered and were not.
  • Marketplaces must check the validity of a merchants VAT number presented on their platforms
  • The government will consider the introduction of split payments, whereby the VAT element of any e-commerce purchase is paid directly to the government

 



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