How to protect your business from becoming involved in VAT fraud

The purpose of this notice is to raise awareness of the risks of participating in transactions connected to a VAT fraud, and to provide guidelines to help you avoid becoming involved in such illegal transactions. Most importantly, it also spells out the consequences of becoming involved in a set of transactions connected with a VAT fraud, even if the transactions in which you are involved are not themselves unlawful. In particular, you should be aware that you could lose your entitlement to a VAT input credit or you may be liable for Irish VAT on previously zero-rated intracommunity supplies where the related transactions are connected with fraud.

The European Court of Justice in a number of cases concerning VAT fraud has held that:
(a) a taxable person who knew or ought to have known that, by his purchase of goods, he was party to a fraudulent transaction can have his right to deduct related input credits refused;
(b) a taxable person who knew or ought to have known that the transaction carried out was part of a tax fraud committed by the purchaser may be denied the right to zero-rate the intra-Community supply to that purchaser

Source Revenue.ie

See also

• Roadtrip through ECJ VAT Cases – Focus on ”Fight against Fraud”
• C-439/04 (Axel Kittel) & C-440/04 (Recolta Recycling SPRL) – Right to deduct VAT may be refused if participating in VAT fraud

---

---