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In order to combat ‘missing trader’ fraud, which is estimated to have cost the Exchequer hundreds of millions of pounds, HM Revenue and Customs (HMRC) have introduced measures which can, in some circumstances, make a supplier (or customer) responsible for its customer’s (or supplier’s) VAT.
The measures will apply when the goods dealt in are any of a number of electronic goods and where you should have reasonable grounds to suspect that VAT will go unpaid. It is thought that this could lead to businesses being caught out as a result of taking insufficient care, rather than being complicit in VAT fraud.
In order to minimise risk to your business, if you deal in such items you need to take ‘reasonable steps’ to establish the integrity of those with whom you have dealings. To do so, you should consider the following:
HMRC recommend that extra care is taken when a deal is offered to you which seems to be particularly advantageous.