VAT fraud

[scott14]

Hi

I found out earlier today that a former neighbour as been arrested on VAT fraud. From what I understand we has been trading within his own company's and he's been doing this for some time :eek::eek:

But I dont understand how this even happens ??

Say for example he sells X + VAT and then claims the VAT back - surely his other company that purchased X would have been expected to pay the VAT ??

[Tom McClelland]

Hi

I found out earlier today that a former neighbour as been arrested on VAT fraud. From what I understand we has been trading within his own company's and he's been doing this for some time :eek::eek:

But I dont understand how this even happens ??

Say for example he sells X + VAT and then claims the VAT back - surely his other company that purchased X would have been expected to pay the VAT ??

It is the other way round. The purchasing company claims the VAT and the selling company pays it.

The simplest fraud is just to make up purchases and not make any sales. So you MSWord a load of fake VAT purchase invoices to your company with made-up suppliers and VAT numbers and make your quarterly claim. Anyone repeatedly claiming their sales are smaller than their purchases is presumably likely to get investigated pretty quickly, or at the very least to get a phone call asking for a reasonable explanation of what is going on.

Another simple fraud would be to charge VAT on all of your genuine sales, but to not report all of them, so that you end up keeping some of the VAT that you collected from your customers.

[elainec100@cheapaccounting]

loads of ways that vat fraud can happen - that is why some registration take forever as extra checks are needed.

was he dealing in mobile phones?