You and me baby ain't nothing but mammals, so let's watch for tech sales VAT weirdness through the channel

Missing Trader Intra-Community (MTIC) fraud, or Value Added Tax (VAT) fraud more generally, has been evident in tech channels since the early '90s and remains a real headache for UK tax authority HMRC and businesses that may unwittingly find themselves involved in it. This is primarily because the traditional routes to market …

[Pascal Monett]

An interesting read

However, I cannot understand that someone agrees to move product without being able to inspect it in any way and not know that they are part of something shady. If it's legal, it is transparent, and I have the duty to ensure that the product is in good shape and has not degraded in any way, or does not risk degrading.

To do my duty, I am responsible for the product while it is in my care and I must be able to have eyes on it. If that is not part of the deal, then I am not going to take part.

[The Godfather]

Re: An interesting read

Drop ships are commonplace today....a lot of stuff is shifted by the supplier direct to the client as the Reseller simply does not have the capacity to take in, check, and ship out.

[Anonymous Coward]

Not so much MTIC as trades descriptions...

Shouldn't this article be more accurately described as an advertorial for HMRC?

On topic: the EU once criticised the UK for contributing to MTIC fraud because we reimbursed businesses 'too quickly'. If we took a lethargic several months like some other member states then there wouldn't be such a problem. And the EU wonders why its economy isn't as dynamic as countries like the US.

[The Godfather]

Re: Not so much MTIC as trades descriptions...

It's not advertorial of HMRC, it's actually critical of it. HMRC can and should do a lot more than it is (which is woeful).

[Doctor Syntax]

"HMRC, to be fair, does try to sort the wheat from the chaff: it visits newly formed companies, especially those that import and export, and provides information on MTIC and hands out such forms as VAT Notice 726 on Joint and Several Liability for unpaid VAT."

This isn't going to do much good when the company has been formed as part of such a chain. They're going to be one of those who disappear.

Perhaps HMRC could be more proactive; set up a help line so people could enquire "I'm thinking of doing business with X. Do you have any concerns about them?". And, yes, I can see a couple of reasons why they wouldn't want to do that, not least because they want a fall guy they can collect from.

[The Godfather]

This is precisely what is needed. HMRC should operate a help line of sorts to take in calls on proposed deals that may or may not be suspect. Simply handing out forms, suspecting MTIC trade and yet taking several years to de-register VAT is never going to be effective.

[Mephistro]

A very interesting article, Mr. Pacey, ...

...and I'm not even a UK national.

Let's hope that the EU finally does something about this particular issue.

Either that or I'll organize one of these ruses myself! _;^)

Updated to ask: I've seen recently several (3?).articles in ElReg related to Economics and with the moderation activated. Is there any reason for this? Anti-troll measures?

[Anonymous Coward]

If you order something from Amazon or Ebay, from a Chinese vendor with the goods in the UK, what are the chances that VAT was actually paid, given that they will not send a VAT invoice?

[TDog]

CFU

Hey, I ordered a new hardback book from Amazon and was charged VAT on it. They are exempt from VAT. I was told that it was one of their associate suppliers who did it. But Amazon allowed the charge to be made.

If they can't even be bothered to check that VAT rules are being applied correctly, what chance is there of them collecting the VAT I was fraudulently charged?

[macjules]

It's an extremely lucrative way for organised crime to launder dirty money

And there was me thinking that all you had to do was to buy a West London football club.

[MyffyW]

Re: It's an extremely lucrative way for organised crime to launder dirty money

And there was me thinking that all you had to do was to buy an East Manchester football club.

[ChrisElvidge]

UK fault?

"It works by using the legislation that allows cross-border trade to be VAT-free, with VAT only applying to each country's domestic sales."

AFAIR the UK is/was instrumental in making sure this rule was not changed by the EU.

[FrogsAndChips]

Re: UK fault?

Isn't that in place to facilitate free movement of goods inside the EU anyway?

[Ken Moorhouse]

Domestic Reverse Charge

I was under the impression that this type of fraud had become less of a problem as a result of the above policy being implemented for certain trading channels (e.g., mobile phones and chips).

This kind of fraud would presumably disappear if Brexit were to happen. Being a devout Remainer, this is about the only good thing I can think of to say about leaving the EU.

[The Godfather]

HMRC....could do better

In effect, the problem has been around for a number of years and is getting no better. It has extended into other product areas. Brexit happening or not is not relevant.

HMRC have for years fallen back on multiple visits and handing out the same forms expecting this to work. It doesn't. Quite simply, business owners and senior managers have far too much to concentrate on and the way shipments are dealt with today means greater opportunity for fraudsters.

The common identifiers I'm sure are known to HMRC but they fail to educate or correctly advise businesses on how to first identify suspect deals and then do not react quickly enough in shutting down buffer and broker companies in the chain. A simple help desk line where a client can tap in, provide details of suspect deals and get sound advice is what is needed. HMRC would save a fortune in the public purse.

[Ken Moorhouse]

Re: Brexit happening or not is not relevant.

Correct me if I am wrong, but I think it is relevant because there will no longer be the concession that goods imported/exported will be notionally "VAT Free" as we will no longer be in the EU.

[J. Cook]

I have nothing to add...

... but the words in the title largely match with the lyric from The Bloodhound Gang's song that's it's riffing off of.

[MikeLivingstone]

Did HMRC request the headling with reference to Bad Touch by the Blood Hound Gang?

All very MTV......the GenXers must be in charge!