Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Acknowledged
HMRC told us that VAT is a particular target for organised crime as it can...
Conclusion
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
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
4.1 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).