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HMRC internal manual

Labour Provider Guidance

Interventions: compliance routes: VAT: deregistration of Labour Providers: under the abuse principle

HMRC can, in limited circumstances, either refuse to allow a taxable person to register for VAT or deregister a taxable person from VAT where we have objective evidence that leads us to believe that:

  • he is committing VAT fraud, or
  • he is part of a scheme to commit a VAT fraud, or
  • his transactions are connected with fraudulent evasion of VAT, or
  • his aim in registering for VAT is to be part of a scheme to commit VAT fraud, or to commit VAT fraud.

The essential element here is that there must be, or likely to be VAT fraud. Non-compliance, such as a failure to render VAT returns, does not amount to fraud unless there is evidence to show that the non-compliance is part of a VAT fraud or is seeking to mask a VAT fraud.

For further guidance see VATF44500 and VATF36170