HMRC VAT Fraud

Members of St Pauls Chambers are specialists in the prosecution and defence of cases investigated by HM Revenue and Customs, both in criminal and civil jurisdictions.

What is HMRC VAT Fraud?

VAT fraud refers to a form of tax evasion. As stated on the government website, VAT evasion can be committed as a result of someone:

• Asking you to pay cash for a job or sale as a way of avoiding VAT
• Asking you to make a payment to someone other than the business, or multiple different people
• Not registering for VAT when they should
• Claiming to have applied for a VAT number when they haven’t
• Using a VAT number that is fake or belongs to someone other than themselves

HMRC VAT Fraud Investigation

If anyone becomes suspicious of an individual or business, they can report VAT fraud and an investigation will be opened. VAT investigations include a variety of allegations against businesses and individuals and are usually brought by HM Revenue and Customs (HMRC). If you’re accused of VAT fraud, you might also be investigated by the Serious Fraud Office (SFO) or National Crime Agency (NCA).

Innocent businesses can be caught in the criminality of complex organised crime, and sometimes legitimate companies and their directors can be targeted unfairly by HMRC in criminal and civil proceedings. The level of knowledge and participation on the part of the defendant is relevant to formulating a defence. Some companies could be operating in the passage of goods without realising.

Suspicion by the HMRC that a business has been involved in VAT fraud can result in the business being subjected to a raid, its directors and employees being arrested, accounts frozen by the use of restraint or freezing orders and a likely visit to the police station for an interview. It can take years before a charge for VAT fraud can be laid because of the sheer magnitude and nature of such organised crime.

As with all matters of VAT fraud, your legal team must be familiar with the extensive terminology and the flow of such complex organised crime. VAT fraud cases can become very complicated and depend on an expert to build a defence in this case. To see what cases our VAT fraud barristers have been involved in, visit our blog.

VAT Fraud Sentencing

In the event of your case going to court, you could be convicted of VAT fraud, leading to a maximum sentence of seven years and a fine of up to £20,000.

Sentencing Guidelines use levels of culpability to ascertain the role of the offender, the extent of planning behind the offence, and other factors determining the sophistication of the operation.

A – High Culpability

• A leading role where the offence is part of a group activity
• When others are involved through pressure or influence
• An abuse of position of power, trust, or responsibility
• Significant planning of the offence
• Fraud conducted over a long period
• High number of victims
• Deliberately targeting vulnerable victims

B – Medium Culpability

• A significant role where the offence is part of a group activity
• Other cases may fall between categories A or C because:
  • Factors are present in both A and C, balancing each other out and/or
  • The offender’s culpability falls between the factors as described in A and C

C – Lesser Culpability

• The offender has a peripheral role and is involved through coercion or exploitation
• The offence isn’t motivated by personal gain
• The offence is ‘one-off’ or opportunist with very little or no planning
• The perpetrator has limited awareness or understanding of the extent of fraudulent activity

Sentencing is made with these levels of culpability taken into account. Possible sentencing can also include restraint orders, financial reporting orders, disqualifications, frozen assets, and more.

If you’ve been accused of HMRC VAT fraud, we advise consulting an experienced VAT fraud barrister as soon as possible to increase your chances of a successful appeal and building a robust defence.