- VAT carousel fraud, also known as missing trader fraud, involves defrauding governments of VAT money
- Criminals acquire goods free of VAT and resell them with VAT added
- Fraud involves a series of transactions where goods are repeatedly bought and sold across borders
- Fraud mainly takes place in Europe, but also in South-East Asia
- Companies create sham shell companies to conceal transactions in a complex web
- Innocent businesses can suffer VAT costs due to involvement in carousel fraud
- Governments can refuse to repay input tax claims based on the “Kittel” principle
- Businesses must carry out due diligence to avoid involvement in carousel fraud
- HMRC provides guidance on due diligence and risk assessment to help businesses avoid fraud.
Source: deeksvat.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
