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HMRC internal manual

VAT Fraud

HM Revenue & Customs
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Basic interventions: output tax interventions: refusing zero rating of dispatches and exports where there is connection with fraud: the Mecsek principle: does the Mecsek principle also apply to exports?

The judgment in Mecsek only covers the denial of zero rating on an ‘intra-Community supply’, reflecting the facts of the case and the question put to the ECJ by the Hungarian court. The Mecsek principle cannot, therefore, be directly relied upon to deny zero rating on non intra-Community supplies (exports).

There are, however, other interventions that can be used in relation to exports, depending on the risk. These can be found in the Export Procedures guidance manual.

If you come across a case involving an export to a third country in which there is evidence that the exporter knew or should have known that its transaction was connected with a VAT fraud, you should contact the VAT Fraud Team to discuss what action may be appropriate.