Online fraud comes in for battery of anti-evasion moves.
The government has announced two major changes in its anti-VAT fraud measures as a result of consultations earlier this year. These are:
1. Reverse-charging in construction
A new VAT domestic reverse charge will be introduced from October 2019 to tackle VAT fraud in the construction industry scheme. This measure will shift responsibility to the recipient for self-accounting for VAT due.
2. Online fraud
The chancellor made the following announcement to clamp down on VAT fraud committed online:
- Overseas businesses
The government will legislate in the Finance Bill 2017/18 to extend HMRC’s powers to hold online marketplaces jointly and severally liable (JSL) for the unpaid VAT of overseas traders on their platforms to include all (including UK) traders. This extension will help tackle the UK hidden economy and eliminate the risk of overseas traders establishing a UK shell company simply to escape the existing JSL regime. This measure will come into force in the spring.
- VAT number display
The government will legislate in Finance Bill 2017-18 to require online marketplaces to ensure that VAT numbers displayed for businesses operating on their website are valid. They will also be required to display a valid VAT number when provided with one by a business operating on their platform. This measure will come into force in the spring.
- Split payments
HMRC consulted in June 2017 on a VAT collection mechanism for online sales known as split payment, which allows VAT to be extracted directly from a transaction at the time of purchase. The government will publish a response in December.
- Compliance on digital platforms
The government expects digital platforms to play a wider role in ensuring their users are compliant with the tax rules. It will publish a call for evidence in spring 2018 to explore what more can be done by digital platforms to prevent non-compliance by their users
Article from ACCA In Practice