1504Finance and Accountancy Briefings

Finance and Accountancy Briefing

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Caveat emptor – Buyer beware of MTIC fraud

Overview

HMRC describes MTIC quite simply as containing two elements: a missing trader and an intracommunity supply. There are two types of MTIC fraud – acquisition and carousel. In its simplest form, MTIC is an acquisition fraud. A commodity of standard‐rated goods or services are purchased zero‐rated for VAT purposes from a supplier based in another EU Member State and sold in the UK for domestic consumption. The importer, or ‘acquirer’, subsequently fails to account for the VAT due on the standard‐rated taxable supply to its UK customer(s).

’Carousel’ refers to a more complex type of fraud in which VAT and goods are passed around between companies and jurisdictions. Over the last 10 years or so, carousel has hogged the limelight in the press and HMRC has done remarkably well in tackling this problem and chasing down the supply chains and challenging exporters’ right to claim input tax, applying the Kittel principle in many of these cases (a taxable person knew or should have known that, by his purchase, he was taking part in a transaction connected with fraudulent evasion of VAT).

To read the full article, please download the briefing.

Tags: Forensic, Accountancy, HMRC, VAT, Acquisition, Recovery.

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