Tax fraud is a very serious crime which has large negative consequences on all aspects of our society. The State collects taxes from people who are working and earning over a specific amount, and then reinvests this money back into society. One of the best examples of this is the NHS, which is funded through taxpayers’ money and then is able to provide free healthcare to subjects of the United Kingdom. Another example is state schools, which are again funded through taxpayers’ money and then are able to provide free education to children who are nationals of this country.
The more tax fraud increases, the less money the government has to reinvest back into society. This means that vital provisions for society, such as public transport, the NHS, pensions and education, lack funding. This could have the effect of lowering the quality of these sectors, and also the closure of many institutions as funds are tightened. This will further affect society as it will put extra pressure on the institutions which remain open, as more people will have to turn to the remaining institutions.
What is VAT Fraud?
VAT fraud is a form of tax fraud. It is a deliberately calculated action. Examples of VAT fraud could involve companies not actually registering for paying VAT despite the fact that they are obliged to; consumers being charged VAT illegitimately by dishonest companies; or traders who make illegitimate claims concerning VAT repayment (this is also known as Missing Trader Intra-Community VAT fraud).
It is important to realise that the government is able to prosecute those committing VAT fraud, and also those who actually help people to commit tax fraud. This means that even if you did not commit tax fraud yourself, yet helped someone else do so, you could find yourself facing prosecution.
When companies deliberately fail to register to pay VAT, they are gaining unfair advantages over their competition. If you are being charged VAT, the company who is charging you VAT must be registered for VAT and declare the VAT figure it is charging to the HM Revenue and Customs.
Signs a Company is Committing VAT Fraud
A company may be failing to declare all of the VAT they are charging to consumers if they place consumer’s monies into an open till, and yet do not ‘ring up’ a sale. Additionally, they may advertise a discounted price for consumers who pay cash, and when consumers attempt to pay by card they only reluctantly accept this. Another sign could be where they advertise goods for a price which is well below the market value for the item. They may also request that consumers pay cash, and then only reluctantly offer an invoice to those that have demanded one.
A tell-tale sign would also be if they request that consumers pay another entity which is not the company itself.
If you believe a company is committing VAT fraud, it can be reported by calling 0800 595 000. This hotline is open 24/7. The people working there do not even require you to provide personal information about yourself, so you can be sure your tip will be a confidential one.
Another point to note is that if your bill/invoice displays the amount of VAT charged separately, the company must provide its VAT registration number (which is nine figures long). If you have doubts over this number’s validity, you can check this by calling 0845 010 9000. This helpline is open 08:00 – 18:00 during the working week.
David Rosen is a specialist in fraud law, so if you need advice, get in touch or have a look at the general fraud advice page on this site.
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