This recordings explains the workings of a common VAT fraud - often known as carousel fraud. Hopefully awareness of the fraud will prevent business getting unwittingly involved
Thanks for the video, it helped in my master's thesis. What would you say is the possible solution for this for the EU? (other than leaving the community of course 😅)
The reverse charge that we imposed on computer chips and mobile phones did help to reduce the fraud. Also some hefty prison sentences for those caught in the fraud offered an element of deterrence
They do try. The problem is that company C are usually not the main criminals. They have been tempted in by stupidity and greed but most of the money has been salted away by the organisers of the fraud. From what I have seen it does tend to be the directors in company C who are most likely to end up in jail though.
Would it still work with Northern Ireland, which is still on the same rules as the EU? Knowing that every intern EU transaction is running on reverse charging then so called broker (Northern Ireland company) would have to forward the tax responsibility back on the company from germany (for example) so isn't that a closed loop? or the Northern Ireland company can still refund the VAT from that sale?
I have not dealt with VAT for a business in Northern Ireland since Brexit so I can’t give a well informed answer to that. My rough understanding is that transactions between NI and the EU are the same as pre Brexit intra EU transactions so the risk probably remains
The directors and shareholders of the company move away without leaving any forwarding address. Any premises are rented and the lease lapses. No one replies to messages from HMRC. So the company effectively disappears
I recorded this video while we were still in the EU. You are correct that leaving the EU should offer protection from this fraud described in the video
@@gordonfaragher To be honest it can still be commited domestically couldnt it so its only saved us from the european element , what are your thoughts?
@@a.qa.q3054 cunning criminals will always dream up new ways of defrauding the Treasury. I have heard of other schemes involving exports outside the EU but it was the MTIC (missing trader intra community) scheme that was the biggest drain on the Treasury
@@gordonfaragher can you explain how leaving eu helps exactly? Nothing really changed except reverse charging On some goods and also list of goods that comes in the UK was removed which should make it easier now.
@@Zidar4561 The whole idea of trade inside the EU is the free movement of goods without restriction. Although the new post EU VAT treatment of goods is similar to the old, the fact that there is a controlled border makes fraud more difficult (though not impossible). The changes in July 2022 do not remove the reverse charge - they just reduce some of the reporting requirements
