HMRC is warning businesses to protect themselves from VAT fraud in their supply chains.
A business can only reclaim the VAT it has paid if that tax was correctly charged by the supplier. Where a business becomes caught up in a supply chain where there is fraudulent evasion of VAT, and the business knew, or should have known that the fraud occurred, the VAT will not be recoverable.
HMRC is restating this warning in the context of buying in labour from labour providers such as gang-masters and employment agencies. There is a particular problem in this sector with hi-jacked VAT numbers, and evasion of other taxes.
HMRC recommends that the business who is the end user of the labour, should ask to see labour supplier’s certificates for VAT registration and incorporation before taking on any workers.
The supplier’s VAT registration number can be checked for authenticity, and whether it belongs to the particular business, by ringing the HMRC Coventry office on: 03000 538254. Note this telephone number can only be used to check VAT details of labour providers, not for any other suppliers. There is no general HMRC phone number to check the status of any VAT number.
The EU VIES online service can be used to check whether a VAT number is a valid VAT number, but it will not tell you whether the VAT number has been hi-jacked and is being used by a business which is not entitled to use it.
About Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.