Usually, the ‘missing’ or ‘defaulting’ trader in the trading chain has disappeared by the time the MTIC/carousel fraud is uncovered by HMRC and the VAT loss has been both identified and quantified.
As the defaulting trader can longer be traced by HMRC, its attention turns to other taxable traders in the trading chain. These are usually the ‘innocent’ traders who have not been directly responsible for the VAT loss in the trading chain.
Such companies are targeted by HMRC under the Kittel Principle on the basis that the taxable trader, when he entered into the transaction, knew or ought to have known that it was connected to fraudulent evasion of VAT.
The innocent companies caught up in such trading chains are often served with a Notice of VAT Assessment & Penalty Notice by HMRC.
We can assist companies challenge the VAT Assessment & Penalty Notice by way of pursuing the Review procedure available via HMRC (Informal Review and Formal Internal Review) as well as by way of an Appeal to the First-tier Tax Tribunal.