The government is to focus on the abuse of indirect tax, particuarly VAT fraud, as part of its ongoing fight against tax avoidance and evasion, Chancellor Philip Hammond confirmed in today’s Autumn Statement
Legislation will be introduced in Finance Bill 2017 to strengthen the regime for disclosure of avoidance of indirect tax, the government said. Provision will be made to make scheme promoters primarily responsible for disclosing schemes to HMRC and the scope of the regime will be extended to include all indirect taxes. This will have effect from 1 September 2017.
Alongside that, it was announced the government will introduce a new and ‘more effective’ penalty for participating in VAT fraud. It will be applied to businesses and company officers when they knew or should have known that their transactions were connected with VAT fraud.
It is hoped the penalty will improve the application of penalties to those facilitating orchestrated VAT fraud. It will take the form of a fixed rate penalty of 30% for participants in VAT fraud and will be implemented following Royal Assent of the Finance Bill 2017.
Another area of VAT tightened up by government include clarification of the VAT zero-rating for adapted motor vehicles to stop abuse, while ‘continuing to provide help for disabled wheelchair users’.
A guidance paper, Tackling aggressive abuse of the VAT Flat Rate scheme was published here.
