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Taxman Cracking Down – 12 November 2013

Member: Nifa

With the taxman cracking down increasingly on evasion and fraud, the chances are that more businesses than ever could be caught up in the investigation net, even those that have not necessarily done anything wrong.  If this happens to a business owner and they are accused of tax fraud, the first action should be to engage a firm of forensic accountants as a defence, because HM Revenue & Customs (HMRC) is best not faced alone.

One of the most common offences to be accused of is carousel or Missing Trader Intra Community (MTIC) fraud, which involves very complex inter-company trading arrangements between the UK and European Community-based firms.  The way this usually works is that high value technical goods such as mobile phones, CPUs or other computer chips are imported VAT-free from the EU. 

The goods are then sold on at VAT-inclusive prices and the original dealer, or a dealer further down the chain, would then disappear without paying the VAT to the authorities.  This basic operation would usually occur through a series of companies all liable to pay VAT. Sometimes the goods are re-exported back to the EU, at which point the exporter reclaims the VAT from HMRC.

However, completely innocent traders who have started to import such goods may find themselves under suspicion and end up having their businesses disrupted while an investigation is carried out, so they need to find good forensic accountants as quickly as possible.  A team of forensic accountants will go through box upon box of ‘evidence’ that the Crown has amassed and will be able to follow the trail of money to prove that the deals have been legitimate.

Without a team of forensic accountants in their corner, the traders run the risk of facing financial difficulties, as the sheer pressure of being faced by a massive Government department with seemingly limitless powers and actually running a business when their bank accounts may have been frozen can prove to be too much.

Author: Roger Isaacs, 12 Novemerber 2013

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