vat carousel fraud

Missing Trader Intra-Community Fraud (MTIC Fraud) is a serious criminal activity that costs the government between £1.12 and £1.9 billion a year. It concerns a chain of supply for VAT purposes where one individual or company does not pay the VAT to Customs and Excise, sometimes intentionally. The defaulting trader usually ‘goes missing’ without discharging their VAT liability or, in some instances, uses a VAT number belonging to someone else. In cases such as these, an honest trader can become jointly and severally liable for the VAT if, at the time he effected the transaction, he knew, or ought to have knew, that the VAT would go unpaid in the supply chain.

The risk lies in someone supplying goods to you, in the course of your trade, charging you VAT and then not paying it over to Customs. The key is in paying attention to who you are dealing with and also to the goods involved. HMRC advise as follows:

‘Businesses should contact the National Advice Service as they will be able to verify names and addresses as well as dates of registration and de-registration where appropriate’.

Checking that a business is VAT registered will not protect you completely as some traders have been known to ‘hijack’ VAT registration numbers. You should consider whether there are any factors that indicate that the person you are dealing with is not the person who is registered, e.g. the address given for payments is different or an unusual payment method is requested.

If you wish to check that the VAT registration number is legitimate for any EC trading entity, simply enter the VAT number into the following website page:

www.ec.europa.eu/taxation_customs/vies/en/vieshome.htm

If you do have suspicions about a trader, you should consider whether you have obligations to report the person to NCIS as they are involved in a crime.