Recommendations & Conclusions
4 items
12
Conclusion
Thirty-Third Report - HMRC performance …
Acknowledged
We raised the point that there was a moral duty and fairness issue to pursue fraud with, for example, some companies getting an unfair competitive advantage through their abuse of the schemes. HMRC said that it looks into every single allegation of fraud, drawing together other supporting data such as …
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We raised the point that there was a moral duty and fairness issue to pursue fraud with, for example, some companies getting an unfair competitive advantage through their abuse of the schemes. HMRC said that it looks into every single allegation of fraud, drawing together other supporting data such as business performance. HMRC said that its controls had been effective at preventing organised crime from abusing the support schemes. It has found that a higher proportion of the losses than it first thought is due to error, rather than fraud, by a large number of fairly small concerns. HMRC said this affects the cost-effectiveness of recovering the losses, because it has to investigate a larger number of people. It said the rate of return it can expect from this activity is less than if it spent the same investment on tax compliance.16 VAT registration
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Government response AI summary
HMRC will continue to address and recover overclaimed grants as part of its business-as-usual compliance activity, taking action against those who have abused the COVID-19 financial support schemes where it is cost effective to do so.
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HM Treasury
13
Conclusion
Thirty-Third Report - HMRC performance …
Acknowledged
We asked HMRC about a case where a criminal used a legitimate company’s details, apparently successfully, to apply for a VAT registration number and make fraudulent VAT 13 Qq 14, 33, 43–45 14 Qq 80–83, 92–95 15 Q 84 16 Qq 89–91, 113 12 HMRC performance in 2021–22 repayment claims. …
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We asked HMRC about a case where a criminal used a legitimate company’s details, apparently successfully, to apply for a VAT registration number and make fraudulent VAT 13 Qq 14, 33, 43–45 14 Qq 80–83, 92–95 15 Q 84 16 Qq 89–91, 113 12 HMRC performance in 2021–22 repayment claims. This fraud was only picked up when the legitimate company received communication from a debt collection agency requesting payment. We raised concerns that safeguards adopted in other countries appear more effective at identifying this type of fraud at an earlier stage, with the German tax authorities apparently refusing the same criminal a VAT registration and reporting the incident to the police.17
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Government response AI summary
HMRC will engage further with international partners, including German tax authorities via its FCLO in Berlin, to understand how other tax authorities tackle VAT fraud through controls on registration, with target implementation by end March 2024.
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HM Treasury
14
Conclusion
Thirty-Third Report - HMRC performance …
Acknowledged
HMRC told us that VAT is a particular target for organised crime as it can involve HMRC repaying large amounts to taxpayers. HMRC described it as an ‘arms race’, with HMRC constantly changing its processes and risk assessment to prevent criminals from abusing the tax registration process, and criminals constantly …
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HMRC told us that VAT is a particular target for organised crime as it can involve HMRC repaying large amounts to taxpayers. HMRC described it as an ‘arms race’, with HMRC constantly changing its processes and risk assessment to prevent criminals from abusing the tax registration process, and criminals constantly finding new ways around them. HMRC felt it was effective at identifying these attempts at fraud early and adjusting to them. It said it needs to balance making the system secure with making it as quick and easy as possible for legitimate companies to register. HMRC said it had put in extra steps to verify the identification of individuals and companies, which has meant it has been able to reject a large number of VAT registrations. However, the extra steps have also meant that there had been delays in legitimate applications for VAT registration in the last year.18 17 Q 9 18 Qq 9–10 HMRC performance in 2021–22 13 2 Supporting taxpayers Customer service
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Government response AI summary
HMRC will engage further with international partners, including German tax authorities via its FCLO in Berlin, to understand how other tax authorities tackle VAT fraud through controls on registration, with target implementation by end March 2024.
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HM Treasury
20
Conclusion
Thirty-Third Report - HMRC performance …
Acknowledged
HMRC said it is trying to improve the data it uses to understand the behaviour of its debtors. It is experimenting with data from credit reference agencies.29 It is also developing a comprehensive single customer account, using funding it received in the 2021 Spending Review.30 HMRC’s digital services are currently …
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HMRC said it is trying to improve the data it uses to understand the behaviour of its debtors. It is experimenting with data from credit reference agencies.29 It is also developing a comprehensive single customer account, using funding it received in the 2021 Spending Review.30 HMRC’s digital services are currently separate and not integrated. The single customer account aims to bring together the data that HMRC has on a customer from across the separate services into a single account.31 Research and development tax reliefs
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Government response AI summary
HMRC recognizes the importance of differentiating between taxpayers who are struggling to pay and those who can afford to meet their liabilities and is expanding debt management services and testing external data sources. They will apply the external data to internal modelling by the end …
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HM Treasury