Wednesday 27 February 2008

HMRC's Magic Carousel

HMRC's Magic Carousel
Now, as we all know, HMRC being a tool of the state is "honour" bound to treat everyone in exactly the same way and not be discriminatory.

The cynics amongst you might argue that HMRC achieves this by treating everyone equally badly. However, it would seem that some are treated more badly than others.

VAT traders have accused HM Revenue & Customs (HMRC)of discrimination, as a result of HMRC's attempts to reduce the costs of the fallout from the carousel fraud scam.

The traders say that despite complying with new regulations, HMRC is delaying repayment of hundreds of millions of pounds due to them from VAT rebates.

Peter Carnall, owner of Eurostar Global, believes that he is being "treated like a criminal" by HMRC.

He is quoted as saying:

"They have forced Eurostar to be without finance and to have extensive problems because of their actions. They haven't paid us a penny."

Mr Carnall has been trying to reclaim £114,000 from HMRC for nearly a year, without success.

"Nearly 12 months after it started trading Eurostar is still without any money which HMRC commissioners are arguably illegally holding."

Martin O'Neil, a senior consultant with Vantis Tax, business advisers that are handling more than 20 delayed payment cases, says:

"We know that fraud exists but it doesn't follow that everybody should be tarred with the same brush."

Carousel fraud has occurred where fraudsters have obtained VAT registrations to buy items VAT free from other EU states before selling them at VAT inclusive prices, they then disappear before HMRC can claim the VAT.

HMRC has decided to use the "one size fits all" approach, and work on the assumption that all VAT registrants are criminals until proven otherwise. This of course goes aginst the basic concept of English law, "innocent until proven guilty".

As such HMRC have slowed down VAT registrations and introduced the "reverse charging mechanism" for the sales of mobile phones and computer chips (where the carousel fraud occurs). Under this mechanism the customer is responsible for paying VAT first, before the trader makes a claim.

A VAT Tribunal recently ruled in favour of Livewire Telecom, over a £2M VAT claim, prompting hopes of a speeding up of payments by HMRC.

However, these hopes have been without foundation. HMRC will appeal against the decision and states that:

"We have had no complaints about delays."

HMRC in denial as ever!

Tax does have to be taxing.

HMRC Is Shite (www.hmrcisshite.com) is brought to you by www.kenfrost.com "The Living Brand"

6 comments:

  1. This is yet another case, like illegalising prostitution rather than cracking down on people trafficing, making us all pay more for alcohol rather than get tough on alcohol-fuelled crime etc, where it is easier to hit the law abiding than tackle those actually causing the problems.

    PS Sorry to make a boring techie point but I find your site is one of those where the back button will not work.

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  2. xoggoth thanks for your comment.

    re back button problem, click the link "home" to navigate back from a specific post.

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  3. It is the home page I have problems with. I expect HMRC have infiltrated it.

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  4. The way HMRC are dealing with the problems in all sectors can be summed up very quickly. One senior Lawyer for HMRC recently told me when asked why he was not working from the guidence set out in HMRC's own policy documents.

    he said........ "the clue is in the title, it is only guidence not law.........."

    HMRC are now above the law!

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  5. HMRC are just a bunch of idiots , who make the law and then can't even stick by it or follow it

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  6. HMRC are above the law and suffer no recourse for their actions. Businesses however have suffered in the extreme as a result of the HMRC draconian policies. This group of cretins murderded our business and we are reluctantly litigating to obtain what they stole from us. They are grossly guilty of abusing their power and have no care for the impact resulting from their unjust policies. The sooner they are exposed for their shameless and disgraceful deeds, the sooner something can be done about it. I dont usually use the word 'hate', but I do hate these bastards with a passion.

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