VAT fraudsters targeted with technology

Technology Correspondent
Sift Media
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Each year some £11.5bn worth of value added tax (VAT) is lost to the state. The vast majority of that revenue the Exchequer could sorely do with is lost to deliberate theft - from self-employed business people who fail to register for VAT to sophisticated 'carousel' fraudsters moving goods among networks of fake companies in a core process of serious organised crime.

Until recently VAT staff trying to deal with this criminality relied on little more than the Yellow Pages and a link to Land Registry files to detect people making false claims, failing to register or withholding VAT they had collected. Finally, that's changed. And a key element in improved efforts to cut fraudulent claims is a new system called Connect, running internally at HMRC since 2008.

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08th Sep 2011 09:28

My and many other agent's

only comment. Why has it taken so long!!!!!!!!!!!!!!!!!!!!!!! It still takes ages for a bone fide business to get a VAT number.

The technology has been there for years. We still don't have computers talking to each other in HMRC!!!!!!!!! etc. etc.

but I am impressed

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08th Sep 2011 15:49

at long last

They may now be able to see the tip of the ICEberg.

Prevention is better than a cure, but back tax needs to be collected too otherwise it is like not punishing rioters.

You have to wonder at the drive for everything electronic and the opportunity for fraudsters that created with no safe guards. You once needed a rubbish accountant now any idiot can file a fraudulent return.

A few simple cross checks across self assesment, tax credits, vat, etc would reveal millions.

At the moment horribly incorrect company accounts are accepted. Non compliant accounts are a fantastic indicator of missing tax but has anyone figured this out ? NO

Self assesment tax returns do not even notice that a previous source is missing even when HMRC have the commencement and cessation dates or that class 4 is due. Dividends are not cross referenced to the company.etc etc.

Companies house strike off companies before HMRC can get to the Tax, etc etc.

And even in an enquiry where missing takings are discovered, no one asks where the missing VAT is or the staff that produced those takings. That was supposed to have been fixed (must be ten years ago)

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Lost Billions!

How is this figure of missing billions  calculated? No doubt using the same technology as was in use before the advent of this , the first ever joined up software , came into use.

What was used before ?

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12th Sep 2011 14:59

missing billions

easy peasy. Just take a percentage of of how much you get from how many investigations, assume that 50% of tax payers are "at it" and hey presto. Alternatively, think up a figure that might sound really awesome.

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12th Sep 2011 15:19

An estimate

I think it's safe to say the number is quite large. However you work out an estimate for this sort of thing.

One plumber I believe did £38M on his own, and no one even noticed his company did not have an accountant or an auditor, which should have sent alarm bells ringing, long before he got to such a large number.

Given that HMRC are actually useless at spotting missing tax the figure may well be an under estimate on their behalf.

Would be interesting to see the assumptions used, however.

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