All businesses, from one-man-bands to large limited companies, have seen a significant increase recently in VAT fraud. But this is not fraud by the business itself, nor by individuals defrauding their employers, it is criminal gangs stealing firms legitimate VAT refunds, who have caused this recent hike in fraud cases.
VAT484 form: What are the fraudsters targeting?
The new wave of fraud involves these gangs stealing legitimate VAT refunds by either using the paper form VAT484 to make changes to a business’s VAT registration details, or by hacking into a business’s online account, to make changes to the bank details held in the VAT account and diverting the legitimate refund to a bank account they control.
(Form VAT 484 is used to update the information held by HMRC, including their contact information, return dates and bank details.)
VAT484 form: Urgent warning given by HMRC
This week, HMRC issued an urgent warning that fraudsters are using a VAT484 form to defraud businesses of their repayments. They’ve admitted that they do not automatically check that the source of such an application by a business to update their VAT details with them, either online or using paper form VAT484, is actually legitimate.
HMRC has also confirmed that it is working on the issue of the form VAT484 being submitted when the bank details have been changed, thus allowing any subsequent repayments to be then released into that new account supp[lied by the fraudsters.
“We are taking action on the relatively small number of cases where paper bank variation forms have been fraudulently used in an attempt to gain access to VAT repayments,” HMRC said in a statement. “We’re putting measures in place to stop this from happening, while asking businesses to remain vigilant.”
VAT484 form: Accountants urge businesses to check
The accountancy profession, almost to a man (or woman) have been badgering HMRC for some months now to issue an urgent warning to all businesses on the subject and at last HMRC have, albeit somewhat belatedly, finally done it.
Ed Saltmarsh, the Chartered Accountants’ technical manager for VAT commented on the issue, which he says is a concern. “Although HMRC writes to businesses when their details have been changed, we are aware that these letters currently do not explicitly state that it is the business’s bank details that have been changed,” he said.
“We would encourage any business that receives a letter about their details being changed to immediately check the accuracy of their VAT details in their business tax account.” Saltmarsh also warned that all businesses, as a matter of routine, should “regularly check their bank account when they are expecting a VAT repayment from HMRC so that any suspected fraud can be reported as soon as possible”.
“HMRC’s belated introduction of additional checks on changes to bank details, combined with businesses being vigilant to ensure their details are correct, should help combat this fraud.”
Tax Accountant’s view
This is an issue that has been lurking below the radar for some time and it is only because of the accountancy profession, who tend to share issues of concern on accountancy forums, that the widespread nature of the fraud has been brought out into the open.
The repayment frauds range from a few hundred to hundreds of thousands of pounds, which places HMRC fairly and squarely in the dock. This is because the tax office has blithely accepted amendments to a business’s online business tax account, which could potentially lead to fraud, without any security checks.
