MTIC Fraud

CTM specialises in this area and is assisting small and multinational businesses in several Missing Trader Intra-Community (“MTIC”) appeals to the Tax Tribunal. We are, in fact, the most successful firm in the UK in MTIC appeals as evidenced by the Tribunal Decision database.

In its simplest form, a company sells a product in the UK, charges VAT and fails to pay that VAT to HMRC. This does not relate to genuine business failure, but where there is a deliberate attempt to commit VAT fraud. Often supply chains involve several companies who are all set up for the sole purpose of committing fraud.

These often-complex chains of companies are designed to frustrate HMRC as they conduct supply chain verifications. The cost to the country is currently running into the billions each year with the fraudsters becoming more and more ingenious. This makes it very difficult at times for innocent traders to spot the fraud.

If there is a connection to fraud, or HMRC have suspicions, they will withhold any VAT repayment due until their enquiries have concluded. Their current Policy is that they will withhold payment for up to a year before making a decision. However, if the delay is unreasonable, there are options through the High Court to force HMRC to make a decision.

If HMRC believe that you knew or should have known of a connection to fraud in your supply chain (the Kittel principle) they will deny a company its right to deduct input tax. If they believe that you knew or should have known of a connection to fraud in your overseas customer chain (the Mecsek principle) they can reverse the right to zero rate an export/despatch and raise an assessment. To read our article on Mecsek-Gabona, please click here.

The reason for CTM’s success is in its staff. 3 members, including a Director and Senior Consultant, previously worked for HMRC investigating MTIC cases. Since leaving HMRC, all have more than 12 years’ experience in defending HMRC decisions to deny input tax, both within CTM and other top city law firms.

We are also able to conduct the advocacy ourselves and present defence cases to a very high standard. This saves substantially on costs if funding the litigation is an issue. Three separate CTM cases have resulted in success without instructing a tax barrister.

However, if counsel is instructed, we work with the most experienced and well-respected tax barristers in the industry and can provide a whole range of options.

For free initial advice, please call us at the earliest opportunity on 0345 557 0005.