Higgs & Sons offers specialist MTIC fraud advice
Scrap metal companies in the West Midlands have been warned to be vigilant after a Scottish dealer was jailed for 18 months after admitting £200,000 of VAT fraud.
Aberdeenshire-based Russel Goodenough, aged 48, imported tonnes of scrap metal from Europe which he sold on in the UK. He then charged customers a total of £205,600 in VAT and failed to pass this on to HMRC. The case involved metal imported from the European continent to the UK
Julia Lowe, head of the dispute resolution group at Higgs & Sons, has said that if any similar firms in the Midlands are concerned about possible MTIC fraud, or have been contacted by HMRC, they should seek specialist legal advice immediately.
Julia said: “Missing Trader Intra-community fraud (MTIC) happens when criminals use a web of companies to abuse the differing VAT rules between the EU states.
“The case in question deals with an organisation that was aware of its actions in terms of not paying the HMRC, but even where companies are trading legitimately, they need to be aware of potential issues elsewhere in the supply chain.”
She highlighted two particularly prevalent forms of MTIC fraud:
Acquisition Fraud: Trades between EU states are zero rated in terms of VAT, but if an importer goes on to charge VAT at domestic rates and then goes ‘missing’ without paying the VAT to HMRC, MTIC fraud has been committed. The goods are sold on down a chain.
Carousel Fraud: As with an acquisition fraud the UK registered for VAT importer goes “missing”, the goods pass down a chain until a UK company registered for VAT exports the goods to another EU country and zero rates the goods. The same goods are then re-imported and the chain starts all over again with different companies or including some of the same companies in the chain.
Julia added: “If your business operates in a sector that may be susceptible to MTIC fraud, we can provide specialist support and advice to ensure that you are not unwittingly caught out.
“HMRC has long issued guidance for businesses which can be accessed from its website. We can help you interpret that guidance for your business and can assist you from the point of view of understanding what HMRC will expect you to be able to demonstrate if it suspects that you are involved in a chain that can be traced back to a tax loss or losses and suspects that you should have known.”
For more information on MTIC fraud, contact Julia Lowe or one of Higgs & Sons’ specialist solicitors on 0345 111 5050, or go to www.higgsandsons.co.uk for further information.
Higgs & Sons is headquartered at the Waterfront Business Park in the heart of the Black Country and employs more than 230 people offering a wide range of legal services.