Value Added Tax (VAT) is a tax on goods and services in Europe. According to the Chartered Institute of Taxation, it's estimated that the total amount of VAT tax evasion is anywhere between two and 15 per cent of gross domestic product (GDP) in the United Kingdom. The penalties for evading VAT are severe.
Other People Are Reading
VAT fraud is evasion of VAT taxes on items sold or claiming back VAT on purchases that you did not make. You are also guilty of VAT fraud if you make a false VAT invoice --for example, if you are not registered for VAT but issue a VAT invoice-- if you charge a higher rate of VAT than is necessary, or if you handle goods that are subject to excise but for which taxes have not been paid, like tobacco and alcohol.
There are three types of VAT fraud that result in a civil penalty, or fine. If Her Majesty's Revenue and Customs, or HMRC, find that you deliberately concealed evidence, you will be subject to a penalty of between 30 per cent and 100 per cent of the amount evaded. If you deliberately evaded taxes but did not conceal your crime, you can be given a penalty of between 20 per cent and 70 per cent, and if the tax evasion was non-deliberate, you can be fined between 10 per cent and 30 per cent of the amount due.
You may be subject to criminal prosecution for VAT fraud if you deceive the VAT investigators and you are a professional, like an accountant or lawyer, or if you have been found guilty of VAT fraud in the past. This will apply if there is one or more businesses involved in evasion. If you are asked to attend a formal interview by HMRC or are contacted by an officer from the Special Compliance Unit (SCO), it could be an indication that the HMRC intends to press formal charges against you for VAT fraud. If you are found guilty of tax fraud in a criminal court, you could face a prison sentence of up to five years.
- 20 of the funniest online reviews ever
- 14 Biggest lies people tell in online dating sites
- Hilarious things Google thinks you're trying to search for