There is no denying that there are a number of benefits of VAT. However, since the businesses act as tax collectors, some businesses also try to take advantage of the system and commit VAT fraud. Due to the rising incidence of such frauds, HMRC has created special teams to catch and prosecute the individuals suspected of VAT fraud.
Over the past few years, HMRC has been successful in catching and convicting a number of well known business owners and professionals. However, Value Added Tax system is extremely complex and sometimes, innocents have also been wrongly accused and prosecuted in the VAT fraud cases.
If you or anyone you know has been accused of VAT fraud, it is imperative that you seek the services of specialist VAT barristers to represent you. The barrister who is going to represent you should have thorough understanding of European as well as domestic VAT system in addition to the applicable law. Needless to say, an average criminal solicitor is not equipped to deal with such cases.
HMRC pays special attention to MTIC (Missing Trader Intra Community fraud cases). There are many different types of MTIC fraud. The simplest form is known as acquisition fraud in which a trader buys from the another EU member state without paying VAT but charges VAT while selling and then disappears without paying VAT to HMRC.
Another sophisticated from of missing trader fraud is Carousel fraud. In this type of fraud, the goods are passed through several companies and the first seller disappears without paying the collected VAT. Due to the nature of this fraud, innocent traders can also get caught in the net and there have been several cases where company directors have been targeted unfairly by HMRC even while making completely legitimate business transactions.
In most of these fraud cases, the offender is charged with Cheating the Public Revenue offense. Also, it is charged as a conspiracy in most of the cases as in actual fraud cases, this activity is planned in detail by criminals and there are a number of people involved. Sometimes, prosecution also uses the offence of Conspiracy to Defraud.
As is the case with all the fraud cases, HMRC has to prove its case against the defendant. The prosecution needs to convince the jury that the defendant was knowingly trying to keep the money due to HMRC.
Therefore, the defence lawyer needs to be familiar with the inner workings of Value Added Tax System. General criminal lawyers are not aware of the common terms used in such cases which mean that they may not be able to represent their client in the right manner. The court also treats various roles such as architects, launderers, shippers, organisers and front liners differently.
Another unique thing about such cases is that these usually involve a high number of transactions. Planning for clients defence involves dealing with thousands of pages of documents related to import/export of goods and documents related to business companies. Every single piece of documentation needs to be examined critically to prepare solid defence.
Similarly, experienced VAT barristers are aware of the importance of unused material which refers to the evidence and statements that are not found relevant by the prosecution but may be helpful for the defence. These documents need to be identified and examined appropriately to be used in the defence.
Ideally, you should work with a barrister who has previous experience in dealing with similar cases and has been successful in defending clients accused of such frauds. Overall, it is important to hire the services of the barrister who has the requisite background in financial fraud cases to successfully deal with the VAT fraud charges.