Under proposed legislation, companies will be fined if they trade with companies that commit VAT fraud, even where they know nothing about it.
How the hell is that fair, or right?
UHY says the penalties (of up to 30% of the VAT due) will also apply to companies that don’t trade directly with fraudulent businesses but happen to be in the same supply chain.
Simon Newark, head of UHY’s VAT group is quoted by economia:
“HMRC risks turning legitimate businesses that get unwittingly caught up in VAT fraud into collateral damage in its war on fraud.To repeat, how the hell is this fair or right?
Fining businesses that had the bad luck to be unknowingly involved in a supply chain with a fraudster wouldn’t be a proportionate punishment, particularly if normal due diligence checks were carried out, and ‘naming and shaming’ them would risk unfairly turning them into pariahs.
How many businesses can guarantee that VAT has been paid correctly at every stage in a supply chain, when success in business frequently depends on not disclosing your suppliers or customers?
There is a real risk that HMRC could slip into using a ‘shoot first, ask questions later’ approach.”
Tax does have to be taxing.
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