Value Added Tax – or VAT – fraud is a serious financial crime and it can have far reaching consequences for an individual or for a business. It involves the evasion or manipulation of VAT payments and this can lead to significant penalties, reputational damage and, in some cases, criminal prosecution.
With the complexity of VAT legislation and HMRC’s rigorous processes for investigation, facing an allegation of VAT fraud can be overwhelming and it can be damaging to reputation just to be accused.
Whether it’s carousel fraud, deliberate misrepresentation or false claims, understanding the nature of VAT fraud and how to respond is critical. In this blog we’re going to offer you some insights from experienced solicitors at ABV Solicitors on how to navigate a VAT fraud investigation.
VAT fraud occurs when individuals or businesses will deliberately evade or manipulate VAT payments or claims. There are different forms of VAT fraud and these can range from minor errors to complex criminal schemes. Some of the most common types include the following below:
Carousel fraud is one of the most sophisticated types of VAT fraud. Also known as missing trader fraud, it occurs when goods are bought and sold between a business in a circular pattern to claim back VAT multiple times without paying it to HMRC. In a typical fraud, goods are imported VAT free from another EU country, sold with VAT included, and then sold again in a loop. The fraudster will collect the VAT from customers but will not pay that forward to HMRC.
False VAT claims involve a business submitting claims for VAT refunds on purchases that were never made. This then overestimates the VAT paid on goods or services or claims VAT deductions on non qualifying purchases.
Falsifying documents and records involves the creation or submission of fake invoices or false accounting records to claim refunds or evade payments. Falsifying records can include exaggerating the value of transactions or even just inventing non existent business expenses to reduce the amount of VAT owed.
Some businesses fail to register for VAT or under report their VAT liability by deliberately reducing their turnover. They may do this also by evading VAT on sales.This can occur when businesses fail to keep accurate records of deliberately misrepresenting their sales to HMRC.
The consequences of VAT fraud can be severe and you should be aware of them in case you are accused. The penalties can range from anything from financial fines to criminal prosecution. Potential penalties that you could face include the following list:
VAT fraud investigations are highly complex and defending against these allegations requires a well thought out strategy from experts. The solicitors at ABV Solicitors have extensive experience in defending clients against VAT fraud allegations and can help businesses at every stage of the investigation. Here are some other ways that we can help:
HMRC is well known for its aggressive approach to VAT fraudulent investigations. A lot of businesses can find themselves under scrutiny even when they’ve not intentionally committed any fraud.
At ABV, solicitors will be able to challenge HMRC’s findings and investigate whether there is sufficient evidence to support the allegations.
Some cases it may be more beneficial to negotiate a settlement with HMRC rather than contest the allegations in a court environment. At ABV Solicitors we connect as intermediaries between you and HMRC to work to reduce the penalties, negotiate a more favourable settlement or even avoid criminal prosecution.
In some more serious cases where criminal charges could be brought for VAT fraud, the expertise of solicitors at ABV Solicitors becomes invaluable to you. Criminal investigations into VAT fraud can be complex and involve a complex financial analysis.
Our solicitors are experienced in defending our clients in criminal cases, ensuring that your rights are protected through the process.
Given the damaging and lasting impact of a VAT fraud investigation can extend far beyond the immediate legal consequences, you need to have the experts at your side. The solicitors are ABV Solicitors are not only committed to defending your case, but also to protecting the ongoing viability of your business. We’ll work with your team to manage public relations aspects of the investigation to ensure that the public and your stakeholders are informed appropriately and that the matter is discreetly resolved.
We’ll also be able to advise you on future compliance, working with your business to ensure that future VAT filings are accurate and compliant with HMRC regulations. With our compliance measures, your business can avoid future investigations and penalties.
By securing legal advice early, you can ensure that your business is well protected and your case is handled with care and diligence. Whether you’re facing accusations of carousel fraud, false VAT claims or other forms of VAT fraud, we can guide you through the process and help you to achieve the best possible outcome.
Reach out to ABV Solicitors today for professional, tailored advice in handling VAT fraud allegations.
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