Retailers owed ‘£1bn’ in VAT repayments
More than 300 traders waiting for HMRC payments
More than 300 companies across the country are waiting for an excess of £1bn in VAT repayments from HM Revenue and Customs (HMRC), an industry body has claimed.
According to the Federation of Technological Industries (FTI), legitimate traders of items such as mobile phones are waiting up to 12 months for VAT repayments as HMRC clamps down on ‘missing trader fraud’.
Fraudsters have cost the Treasury billions of pounds by importing items VAT free from EU member states, then selling them on to traders in the UK with the tax re-added.
Dishonest traders are then pocketing the VAT, rather than handing it over to Customs.
The loss to the treasury is multiplied if the goods are exported out of the UK and the legitimate trader claims the VAT back from HMRC.
Consequently, ‘innocent’ traders who are oblivious to this fraud are suffering lengthy delays when they try to reclaim their VAT expenditure, as their claims are subjected to an ‘extended verification exercise’ as Customs attempts to trace the scammers in the supply chain.
Chris Papaloizou, a spokesman for the FTI, said: “By their very nature missing traders in carousel frauds have a short life expectancy and pack up and close shop long before the fraud is detected.
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“Legitimate companies are still here, paying their taxes and struggling to stay afloat because the unlawful actions of HMRC are depriving them of the cashflow which their businesses require.”
The FTI is currently organising a class action under the Judicial Review Protocol to challenge what they say are ‘unlawful’ actions by HMRC.
According to the FTI, Dawn Primarolo, Paymaster General, clarified the mindset at HMRC on last week’s Panorama when she said ‘a delay to the innocent is better than a payment to the guilty.’
© Crimson Business Ltd. 2006