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HMRC internal manual

VAT Fraud

From
HM Revenue & Customs
Updated
, see all updates

What is VAT fraud?: introduction

VAT fraud covers a wide array of different types of fraud using both goods and services, including:

The above list is not exhaustive.

By far and away the largest fraud to have been undertaken is MTIC fraud. HMRC has estimated that, over the past few years, MTIC fraud has cost the UK exchequer:

  2005-06 2006-07 2007-08 2008-09 2009-10
           
Attempted fraud (£bn)          
Upper bound 5.0 4.0 2.0 2.0 2.0
Lower bound 4.0 3.0 0.5 1.0 1.0
Impact on VAT receipts (£bn)          
Upper bound 3.5 2.5 2.0 2.0 1.5
Lower bound 2.5 1.5 0.5 1.0 0.5

The figures for MTIC fraud are published annually in the ‘Measuring Tax Gaps’ publication, which can be found on the HMRC website.

These losses represent a significant depletion of the revenues which are provided by UK taxable persons.

This and the following sections discuss:

  • what VAT fraud is (VATF22000);
  • some different examples of VAT fraud (VATF23000);
  • what to consider prior to using an intervention (VATF30000);
  • what interventions are available to you if you discover VAT fraud (VATF40000 and VATF50000);
  • indicators of contrivance (VATF60000);
  • why due diligence and risk assessments are important (VATF70000);
  • what to do if you discover VAT fraud (VATF80000); and
  • what to do if the taxable person appeals (VATF90000).