We all know that VAT is payable on goods imported into the country, and a lot of companies rely on paperwork being processed by freight forwarders/agents to forward the Vat onto HMRC. However, the system is flawed with IPR (Inward Process Relief)…. This means that goods can be released through the system with no Vat payable at the import time, and the payment deferred for up to 6 months, allowing companies to do complete another process relevant to the products and prepare them for re-export .
This, however, opens up the opportunity for fraudulant exporters/agents to take advantage of this IPR system, using legitimate companies Turn numbers to import goods and Invoice the company for VAT. The company concerned pays the agent VAT for the goods. The company buys these goods for re-sale and is unaware that the agent has listed them as an IPR import.
The agent subsequently later exports other goods under the turn number of another company as these new completed reexported goods. This completes the cycle and is almost impossible to trace due to the numbers of imports and exports.
This must be costing the government millions per year in lost VAT payments
All this could be avoided if it was compulsory for all companies to pay VAT directly to HM Customs and not to the Importer / Agent and in addition to this scrap the IPR altogether.
Why does this idea matter?
Lost TAX Revenue… The HMRC seems to have a policy of only actively chasing amounts over a certain value, so many of these are smaller agents taking advantage of many different companies so the impact is lots and lots of smaller amounts adding up to millions.
And it is fraudulent