VAT - NI & Ireland

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millertime

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I'm having an agrument here with a former colleague who runs his own business. He's bought a load of stuff for his house from suppliers in NI and avoided paying VAT by quoting his Irish VAT number. This has to be dodgy.

What are the chances of him getting caught through VIES etc or how would he be detected in the first place??
 
Am I correct in saying that he deliberately used his Irish business VAT number to purchase goods which were used in his private residence, i.e. not for business purposes? If so then this is tax evasion. One is not permitted to clam VAT input credits, or zero rate goods ( which comes to the same thing) used for private purposes, regardless of where they are purchased from.

As to getting caught (1) someone spills the beans to Revenue (2) Possible to crop up on random inspection of transactions by Revenue. Would depend on whether he put the transactions in his Irish business returns, then an audit of his returns might raise the question of what the goods were used for. But it's hard to say if it would have a good chance of being discovered. It might depend on returns form the NI supplier which may get checked and passed on for verification.
 
a client of our office recently got caught for doing this exactly. I presume it came up through the VIES verification.
 
I dont think a random inspection by revenue here would turn up anything if he paid for the items himself and just used the company vat number not to pay UK vat.

Obviously if he put a HD tv through the company books then it would show but not if he paid with his own credit card etc and never used the supplier invoice in his books

If he did pay for these himself you could argue that he hasnt committed a revenue offence in ireland at all, as the irish taxpayer is not out of pocket, HMRC might have something to say about it but then it would have to turn up on one of their inspections.
 
contemporary said:
If he did pay for these himself you could argue that he hasnt committed a revenue offence in ireland at all, as the irish taxpayer is not out of pocket
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This is a rather naive 'argument', to put it mildly. The entire VAT system is based on, and administered under, EU law. In all EU states, cross-border VAT fraud is regarded as a serious crime.
 
contemporary said:
If he did pay for these himself you could argue that he hasnt committed a revenue offence in ireland at all, as the irish taxpayer is not out of pocket,
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No loss to Revenue does not necessarily mean no offence.

In fact, when a trader purchases goods zero rated as EU acquisitions, they become liable to the VAT in Ireland. They then claim a VAT input if appropriate on the goods reducing their liability to nil. As in this case a VAT input can not be claimed due to the goods being for personal use, then there may be an argument for a liability here. See [broken link removed] the part headed "I am a VAT registered person. Can I buy goods VAT free from a business in another Member State of the E.U.?"

AS you say, the problem is picking it up if only the VAT number was used and the payment did not go through the business. Tax evasion is tax evasion, whichever EU country it is committed in.
 
Thanks all for the feedback.......he's paying for it himself not through his business but is quoting the VAT # to reduce the cost. there's no doubt that this is tax evasion in NI whatever about an offense here.

I'm just wondering whether HMCR pick up these things or not. Is this not the point of VIES??? I'm surprised there is no great focus on this by Revenue esp along the border
 
T McGibney said:
This is a rather naive 'argument', to put it mildly. The entire VAT system is based on, and administered under, EU law. In all EU states, cross-border VAT fraud is regarded as a serious crime.
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I'm not saying its correct, but it is an attitude that I have come across. I dont agree with it but I have come across a case where someone brought their golf clubs using their company VAT number and paid for it with their own credit card, the argument/attitude was that the state wasnt out of pocket
 
millertime said:
Thanks all for the feedback.......he's paying for it himself not through his business but is quoting the VAT # to reduce the cost. there's no doubt that this is tax evasion in NI whatever about an offense here.

I'm just wondering whether HMCR pick up these things or not. Is this not the point of VIES??? I'm surprised there is no great focus on this by Revenue esp along the border
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Hello Millertime,

the ofence is here in Ireland. If you use an Irish VAT registration, you have to account for the transaction in your VAT return as an Intra EU acquisition.

The VIES declaration (which records the transaction plus the VAT details of both the supplier and buyer) issued in the UK goes to Brussels and is matched against the details filed here in Ireland against the Irish VAT number.

I reckon it is very likely that if there is a significant level (value / number of transactions) of activity it will raise a flag that is likely to lead to an inquiry by the VAT office here in Ireland.

Regards,
Rudolf289
 
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