Reporting HMRC VAT fraud can be a daunting task, but if you believe someone is evading taxes, you have a responsibility to report VAT fraud.
Here, our guide explores what VAT fraud is, how to report VAT fraud anonymously and what to do if you’ve been reported for HMRC VAT fraud.
VAT fraud is a form of tax evasion on the of goods and services. VAT fraud occurs when a person or business avoids charging VAT, or doesn’t pay HMRC the VAT owed, but still charges customers the VAT rate.
Within the UK, VAT is commonly at a rate of 20%. Although in response to the Covid-19 pandemic, this rate has been reduced to 5% for certain goods until January 2021.
Four signs a company might be evading VAT include:
An example of HMRC VAT fraud is if you are having some gardening work done at your home and the gardener asks for cash-in-hand to avoid paying the VAT tax.
Ultimately, if you are found guilty of VAT fraud, the consequences are a fine of up to £20,0000 and a maximum seven-year prison sentence. The levels of high, medium or low culpability, outlined in our VAT Fraud service information, are used to sentence the accused.
If you suspect that an individual or business is intentionally or unintentionally committing HMRC VAT fraud, you must report it. Failure to report VAT fraud to HMRC could result in you being responsible for paying the tax yourself!
The quickest way to report any suspected VAT fraud is through the confidential and anonymous HMRC online form or by reporting the business to the fraud hotline. Once you’ve reported the business or person suspected of VAT fraud, an investigation will then be opened by HMRC.
You don’t have to complete every section of the online form, although HMRC encourages you to provide as much information as possible. It’s useful to provide as much detail about how you’ve come to discover that the person or business is not charging or paying VAT.
The online form has five sections which include:
Your personal safety is a top priority; hence it’s important to bear that in mind when you report VAT fraud. For instance, when reporting VAT fraud over the telephone or online, you don’t have to give your personal details
For your protection, HMRC recommends further safety guidelines to consider:
If you believe that someone suspects you are involved in tax evasion or believe that someone has reported you, there are several factors to be aware of.
While reporting VAT fraud is typically done with good intentions, VAT reports are not always accurate, and businesses can be falsely accused of tax evasion. The consequences of allegations can be dire, including business raids, arrests of business personnel, account freezes, and police questioning. This can, of course, be hugely detrimental to the reputation of the business.
It’s important to have a solid legal team in place during a VAT fraud investigation as the outcome of the case relies heavily on the expertise and skill of the defence, due to the intricacies of UK and European tax law and the particularly specialist terminology. As VAT fraud investigations are often incredibly complex and detailed, it can take years for a tax fraud case to be laid to rest.
If you or your business is being investigated for HMRC VAT fraud, it’s never too early to get in touch and form a strong defence. Please don’t hesitate to get in touch with our experienced fraud barristers today; we are here to support your case.
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