HM Revenue and Customs (HMRC) VAT fraud crackdown is starting to have an impact higher up the food chain, as claims emerge that mobile phone vendors are feeling the effect of its Extended Verification repayment process.
Although vendors such as Nokia, and Motorola have declined to comment to CRN about the effect of HMRC’s strategy on their UK business, others are convinced that the process is starting to hamper the industry.
Anthony Elliott-Square, director at the Federation of Technological Industries, which has launched a group action against HMRC on behalf of 100 UK traders that have had
VAT repayments withheld, said: “We understand that a high percentage of mobile phone manufacturers’ output goes into the grey market [where mobile phone traders legitimately buy surplus stock in the UK and ship it abroad] because this is how they can keep their production line moving and avoid waste.
“Since the implementation of HMRC’s Extended Verification policy and the decline in this grey-market trading, sales figures for several manufacturers have declined markedly.”
As CRN’s campaign to highlight the plight of innocent traders caught up in HMRC’s VAT repayment process reaches its fifth week, Oliver Murray, managing director of Amersham-based mobile phone trader MGB Associates, told CRN that the strategy is having a domino effect all the way up the chain.
“HMRC has owed us £216,000 in VAT since September,” he said. “We have had to let two members of staff go and are about to vacate our offices. I support HMRC in getting rid of criminals, but I don’t see why the whole industry should be targeted. HMRC is crippling legitimate traders and it is now affecting major vendors that are suffering from the drop in trade.”
Murray has enlisted the help of his local Conservative MP, Cheryl Gillan. Speaking to CRN, Gillan, who is also shadow secretary of state for Wales, confirmed she had written to HMRC on Murray’s behalf. She added that she was surprised at the scale of the problem.“This is a matter that HMRC needs to address,” she said.
An HMRC representative said: “Our activity is closely targeted at the claims that bear the distinct indications of missing trader fraud.”
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