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HMRC internal manual

VAT Fraud

From
HM Revenue & Customs
Updated
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Contrivance: The way the taxable person trades: Turnover and growth

The rate and level of increase in a taxable person’s turnover may be an indicator that this growth is not down to normal commercial factors (VATF32000) but linked to involvement in VAT fraud.

Aspects to consider include:

  • Has there been significant investment? (VATF62600)
  • Has there been a supply of an innovative product or service, supported by significant advertising and promotion? (VATF62700)
  • Has the taxable person the staff / resources / expertise?
  • Has the annual net turnover from either the VAT returns and/or annual accounts shown an exceptional short-term turnover growth, not supported by any apparent justification such as previous involvement in the industry etc?
  • What capital or assets did the taxable person have when he entered into the transactions?

The above list is not exhaustive.