What is VAT fraud?: examples of different types of VAT fraud: missing trader intra-community (MTIC) fraud: descriptions of those involved in MTIC fraud
There are a number of entities involved in perpetrating MTIC fraud, and sometimes the array of titles used to describe them can seem baffling. This section provides a brief description of each entity and the role it plays.
The defaulter can also be known as ‘the missing trader’, ‘the acquirer’, or ‘the hijack trader’, depending on the particular facts. The important thing to remember is that this is the entity that defaults on its VAT liability.
The missing trader
This is a UK VAT registered entity that has incurred a VAT liability but has either:
- failed to render one or more VAT returns, or
- has rendered the return but has failed to make payment.
As the name suggests, this entity ‘disappears’ when HMRC tries to make contact, leaving no forwarding address, books or records.
This is a UK VAT registered entity that acquires goods from another EC Member State and then sells those goods on to another UK VAT registered entity. In most cases this entity then ‘disappears’, leaving an unpaid VAT liability.
The hijack trader
This is a UK non-VAT registered entity that uses (‘hijacks’) another VAT registered entity’s VAT number. In most cases the ‘hijacked’ entity will not know about this until HMRC makes contract to verify the supplies.
A UK VAT registered taxable person who is placed in the transaction chain between the defaulter and the broker. Depending on the complexity of the fraud, there can be any number of buffers.
A UK VAT registered taxable person who sits at the end of the transaction chain and either dispatches or exports the goods or services. As the supply is zero rated it incurs an input tax liability but no output tax liability, thus making its VAT return a repayment return.
The contra trader
Contra trading is looked at in greater detail in VATF23550.
The conduit trader
Conduit trading is described in VATF36300.