VAT Fraud Solicitors

A VAT fraud investigation can cause significant disruption for businesses and may result in severe penalties if you are convicted of a tax fraud offence. If your business has been subject to a VAT fraud investigation, the expert business crime team at JMW Solicitors can help you mount a strong defence from the outset.

Our expert VAT fraud defence solicitors have years of experience in this field and will help you resolve the situation efficiently and effectively. We have a strong track record of success in this area, and can minimise the negative impact on your company’s finances and day-to-day operations as the investigation moves forward. JMW's expert legal advice can help you to comply with an investigation by HM Revenue & Customs (HMRC), the Serious Fraud Office and other authorities without incriminating yourself.

Speak to a solicitor as soon as possible if you are under investigation or facing VAT fraud allegations. Get in touch with JMW by calling 0345 872 6666. Alternatively, fill in our online enquiry form to request a call back.

How JMW Can Help

The specialist VAT fraud solicitors at JMW can provide the best possible support and guidance on a wide range of topics relating to VAT investigations, including:

• Advice and assistance on the VAT investigation process
• Immediate response to dawn raids, arrests and interviews under caution
• Conducting carefully managed disclosures to HMRC to avoid VAT investigations
• Defence of VAT fraud prosecution
• Challenging restraint orders
• Challenging confiscation proceedings

Our team is available at all times to react as quickly as possible when you are notified of a VAT investigation. We will help you form the strongest possible team, all of whom are able to provide additional advice on complex VAT fraud cases. The team may include:

• Independent tax consultants
• Forensic tax accountants
• Specialist tax barristers
• Forensic computer experts
• Reputation management experts
• Media law advisers

JMW's VAT fraud lawyers have successfully defended and advised individuals, business owners, directors and high-level figures in alleged tax fraud investigations and prosecutions. As a law firm that specialises in business crime and fraud defence, we are in a strong position to help with criminal cases of this nature.

For your case to stand the best chance of success, you should seek legal advice from the moment you are informed that you are under investigation. However, we are able to provide guidance and representation at any point during your case. If you are facing an HMRC VAT fraud investigation or allegations of a related offence, contact our expert VAT fraud solicitors at your earliest opportunity.

Meet Our Team

JMW’s business crime team has a wealth of experience in defending clients accused of VAT fraud. From initial investigations to any criminal proceedings that arise, we apply our expertise and knowledge to protect your rights.

Which Organisations Investigate VAT Fraud in the UK?

HMRC is the main authority responsible for reporting VAT fraud and carrying out investigations in the UK. The organisation has significant powers to gather evidence, including reviewing business records, VAT returns, registrations and conduct, and speaking to witnesses who may have information about a company's activities.

However, while HMRC is the leading body for VAT-related investigations, it may involve other UK authorities when investigating serious or complex fraud cases. Bodies such as the Serious Fraud Office and other law-enforcement agencies (including national police economic crime units) may also be involved in investigations into serious economic crime or when criminal offences are detected.

By discussing a fraud investigation with JMW's VAT fraud lawyers, you can find out more about what to expect from the process and have our legal team discuss the likely outcome of an ongoing investigation. We can help you to determine whether you are facing a criminal conviction and offer the legal services you need at all stages of an investigation, from initial police station representation during interviews with the authorities to representing clients in court where necessary.

What Transactions Are Investigated for VAT Fraud?

When goods are exported from one EU country to another, the importer does not have to pay VAT, but in some circumstances VAT is charged as soon as the importer sells those goods domestically. The VAT collected in these transactions is supposed to be handed over to HMRC, but businesses sometimes fail to do so - whether as an intentional tax avoidance scheme, or through errors.

On a more sophisticated level, the goods that are imported are often put through a series of transactions where the VAT generated is effectively stolen. This “carousel fraud” is completed when the goods - which often include mobile phones or other portable electronics items - are exported back to the EU, allowing criminals to collect VAT amounting to hundreds of thousands of pounds.

Because carousel fraud sees items go through several transactions in a chain, there is a risk of businesses unwittingly becoming part of this chain and enabling the carousel fraud. No matter what you are accused of, the team at JMW can review your circumstances and offer a high-quality fraud defence service to demonstrate your innocence.

What Are the VAT Fraud Offences?

A VAT fraud investigation could lead to several different types of charges, as there are a number of related offences that may be alleged. These include:

Fraudulent evasion of VAT

This is the core offence under the Value Added Tax Act 1994, and includes:

• Deliberately understating output tax (the VAT that should have been charged).
• Falsely claiming input tax credits, repayments or refunds that the business is not entitled to.
• Obtaining a VAT credit, refund or repayment by falsifying information or documents.

Any business or individual who acts knowingly in relation to VAT evasion or takes steps with a view to tax evasion, even if the evasion itself is not completed, may commit this offence. This can come with a custodial sentence of up to 14 years.

Making false statements, returns or documents for VAT purposes

A separate but related offence involves filing false VAT returns or forging documents for the purpose of avoiding payment. Under this section of the legislation, it is an offence to:

• produce, furnish or send a document, which is false in a material particular, with intent to deceive; or
• make a statement that you know to be false in a material particular, or recklessly make a material false statement.

This could involve submitting a VAT return that contains false figures, using forged invoices, claiming refunds based on fake or overstated costs or misrepresenting a business’ status, among other examples.

Failure to register for VAT when required or charging VAT without accounting for it

It is an offence for a person who is liable to register for VAT to deliberately avoid registering, or for a taxable person who is not registered for VAT to charge VAT on supplies and then fail to account for that VAT. These may be part of a wider fraud scheme but can result in additional charges following a fraud investigation.

Schemes such as carousel fraud and missing-trader fraud

One of the more complex and high-value kinds of VAT fraud is “missing trader intra-community fraud” (“MTIC fraud”), sometimes referred to as “carousel fraud”. MTIC fraud involves goods being moved between traders in different EU member states, where VAT rules provide for zero-rating for exports.

Fraudsters charge VAT, reclaim input tax, or use intermediary companies (“missing traders”) who vanish before the VAT is paid over, while other companies reclaim the VAT. These schemes often involve “buffer” companies and sophisticated structures to hide the trail. Because they are complex, investigations can take a long time and involve cross-border cooperation and input from multiple agencies.

Handling goods or services where VAT has been or will be evaded

If a person gains possession of or deals with any goods, or accepts the supply of any services while believing that VAT on the supply of the goods or services has been or will be evaded, this also constitutes an offence. Being knowingly (or recklessly) involved in a supply chain where VAT has been or will be evaded can constitute an offence separate from carousel fraud.

Related offences

VAT fraud activity often overlaps with other offences that are related but separate, which may include different types of tax fraud and money laundering. Offences of fraud by false representation, and failing to disclose information, could underlie VAT fraud, and related charges may be brought under the Customs and Excise Management Act 1979. You may be charged with false accounting (under the Theft Act 1968) alongside VAT fraud allegations. If there was any collective scheme, offences such as conspiracy to defraud may be raised. Because many VAT fraud schemes involve multiple entities, layers and steps, HMRC and other authorities may bring in these ancillary offences in addition to VAT-specific charges.

What Penalties Do Companies Face for VAT Fraud?

If a business is suspected of being involved in VAT fraud or other financial crime, it can result in a number of consequences even before any conviction is made. The process of an investigation into tax evasion and fraud can be extremely disruptive and lead to reputational damage even if the case does not proceed to court. As such, it is vital to have an experienced criminal defence team stand by your side and protect your rights throughout any VAT fraud investigation.

HMRC investigations can lead to:

• The business being subjected to a dawn raid
• Directors and employees being arrested
• Accounts being frozen by the use of restraint or freezing orders
• Staff being interviewed under caution by the police
• Crown Court trials for company directors

There are several types of fraud offences of which you might be convicted in a VAT fraud case, each of which can come with severe penalties. Convictions in financial fraud cases can result in:

• Assets being seized under the Proceeds of Crime Act 2002
• Significant prison sentences for directors
• An unlimited fine

Your VAT fraud solicitor can mount your defence and present mitigating circumstances in your favour, which can help to reduce the severity of the sentence you receive. As such, it is vital to instruct an experienced legal professional immediately for early legal advice.

Can Innocent People Be Affected by VAT Investigations?

Although cases of VAT fraud are clearly illegal, there are also many transactions that are completely legitimate and lawful but which resemble fraudulent transactions. Tax authorities frequently find it difficult to distinguish between fraudsters and lawful traders.

Even in cases where the HMRC acknowledges no criminal involvement, VAT refunds are not made, which can impact cash flow and budgets among innocent businesses. This issue is compounded by the low threshold for suspicion in these cases: for example, new businesses in the mobile phone or high-tech gadgetry industry often find themselves under suspicion, as well as those that see their sales grow exponentially over a short period of time.

Well-established businesses with a relatively good working relationship with the tax authorities are not immune from this type of draconian treatment either, which is why all companies should seek legal representation as soon as possible if they are subjected to a VAT investigation.