Does the use of VAT split payment constitute acting with due diligence?

Due Diligence Assumption: The split payment mechanism (MPP) for VAT transactions should inherently be associated with the assumption that taxpayers using it acted with due diligence, unless there is a clear lack of verification regarding the supplier’s registration data.
Tax Authority Practices: There is a growing trend where tax authorities question taxpayers’ rights to deduct VAT based on alleged negligence in selecting suppliers, despite the use of the split payment mechanism, which was designed to enhance security and transparency in VAT transactions.
Taxpayer Protections: The split payment mechanism serves as a protective measure for taxpayers, as it allows for verification by tax authorities before funds are released, suggesting that if the tax authority does not identify irregularities, it indicates the taxpayer exercised due diligence. However, in cases where no actual transaction occurred, the right to deduct VAT may still be challenged.

Split payment