Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Acknowledged
We asked HMRC about a case where a criminal used a legitimate company’s details, apparently...
Conclusion
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
Government Response 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.
Government Response
Acknowledged
HM Government
Acknowledged
4: PAC conclusion: We are concerned that HMRC may be lagging behind other established tax authorities in preventing fraudulent VAT registrations. 4: PAC recommendation: HMRC should engage with its international counterparts to understand what lessons it can learn in preventing fraudulent VAT registrations and minimising the impact to honest taxpayers. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: end March 2024 4.2 HMRC has in place an effective range of controls that protect the tax system from attack by criminals and other frauds. Since 2020-21, HMRC has prevented over £4.5 billion revenue loss from attempted repayment fraud. HMRC has well-established links with overseas tax authorities, through its fiscal crime liaison officer (FCLO) network, the Joint Chiefs of Global Tax Enforcement (J5) community and the OECD Forum on Tax Administration. HMRC works with those partners to understand the changing nature of criminal threats and respective capabilities to counter them. HMRC will engage further with international partners to understand more about how other tax authorities tackle VAT fraud through controls on registration, including engaging with the German tax authorities via its FCLO in Berlin (as referenced in the report).