Missing Trader Fraud described by your accountants in Richmond

We were recently contacted by one of our fellow accountants in West London about one of their clients being affected by Missing Trader Fraud, which costs the UK millions of pounds each year. They wanted to know if any of our clients from Harnett Accountants in Richmond had also been affected. Luckily none of them had been, but it made us think that more of you out there need to be more informed on the concept.

What is Missing Trader Fraud?

The best way to describe Missing Trader Fraud is through an example. For instance
A VAT registered company based in the UK purchases small high-value goods (such as mobile phones) in another EU country and imports them into the UK (with zero-rate VAT). The importer then sells those goods at a VAT-inclusive price within the UK. However, before the VAT can be collected by HMRC from the UK customers, the importing company is liquidated and its directors disappear (become a missing trader), leaving the VAT unpaid. If you are the UK customer who bought said goods from said company, the Tax Office will block your claim for repayment of the VAT you paid on your purchase, whether you knew you were part of the fraudulent supply chain or not.

What should I look out for?

There are about nine key signs that a company may be a criminal trader. These are:

• The company has no prior financial or trading history
• The company has been recently acquired/established and the owners have no prevuiys involvement in your sector
• The company trade from residential or short-term lease property
• The company have poor knowledge of the market and products available
• The company claim there is no apparent risk for you in the deal
• The company repeat deals at the same/lower prices and small/consistent profit
• The company instructs payments to third parties or offshore bank accounts
• The company ask for a profit far less than the full market price of the good
• The company offer you an unsecure loan with unrealistic interest rates/terms

If you spot any of these factors when purchasing something then please stop immediately and contact your accountant so they can do a customer check on the company. This involves carrying out credit/identity checks on the supplier and directors of the company along with the product itself. If needed, the police will then be contacted.

Don’t forget Harnett Accountants in Richmond offer a free hour no obligation consultation and can also be found on Facebook, Twitter and Google+ or wait for our next daily blog instalment!


Tags: , , , , , , , , , , , , , , , , , , , , , , ,

No comments yet.

Leave a Reply