Protecting Your Business: VAT repayments – safeguarding against fraudsters

Who should read this?

Are you registered for VAT? Do you routinely receive repayments of VAT from HMRC? If so, this may affect you, so please read on.

Recently, there have been several reported cases of taxpayers online VAT accounts being amended, without their knowledge, to include fraudulent bank details. As a result, any VAT repayments expected by the VAT registered trader have been diverted to a third-party bank account.

This article focuses on how to determine if your online VAT account has been amended, without your knowledge, to include fraudulent bank details and if an expected VAT repayment has been made to a third-party.

How can this happen?

HMRC ask taxpayers to use Form VAT484 to request changes to the taxpayer’s VAT details. This includes changes to the bank account used to receive repayments of VAT. The fraudster uses this form to request a change to the taxpayer’s bank details.

HMRC contact the taxpayer in writing to inform them that their request to update their VAT account details has been actioned, however HMRC do not provide information regarding what details have been amended. Due to a lack of specification from HMRC, taxpayers who have requested HMRC to amend any VAT account details within the last couple of years are led to believe that this is simply confirmation of a previous request, rather than fraudulent bank details being added to their account.

What have HMRC said about this issue?

HMRC have confirmed that they are aware of the fraudulent changes to taxpayers’ bank account details and have dealt with the matter accordingly, however, have not informed the taxpayer where this has occurred. We continue to raise any further instances through VAT Committees, which report concerns directly to HMRC.

HMRC have assumed that it is large businesses who are being targeted by these fraudsters, however we are aware that smaller businesses are also being targeted and assume that fraudsters are targeting specific sectors which routinely make zero-rated supplies. By way of illustration, suppliers of food, children’s clothes, and exporters of goods.

HMRC plan to mitigate these fraudulent cases by withdrawing the pdf version of Form VAT484. They have advised that until they do that taxpayers continue to confirm that any requested changes are genuine.

How long does it take for HMRC to pay a VAT repayment?

HMRC advise that VAT repayments will usually be made within 30 days of the date HMRC receive your VAT return, provided that further checks of the VAT return are not required.

If you have added bank account details to your online VAT account then the repayment will go directly into that bank account, however HMRC require any bank account to be in the name of the business. If you have not added bank details to your online VAT account, then the repayment will be made by cheque and issued to your principal place of business.

HMRC have advised that if you have not received your repayment, or received any correspondence from them regarding your return, within 30 days of submitting the return, that you should contact them for an update.

How can I confirm if I have received my VAT repayment?

We advise that you check your online account to confirm that all your details are correct. If there are any incorrect details, you can amend these through your online account and you should contact HMRC to report the error. Within your online account you can also track the status of your VAT repayments and we advise you to regularly check their status to confirm if the VAT repayments have been made.

We also advise you regularly check your bank account to confirm if you have received any expected VAT repayments from HMRC.

If your online account shows that HMRC have made the VAT repayment, but your bank account indicates that you have not received any funds, you should contact HMRC immediately to alert them of the missing funds.