HM Revenue & Customs (HMRC) has ramped up its efforts to combat VAT fraud in a sweeping new crackdown that could leave thousands of businesses under scrutiny. The tax authority is deploying advanced data analytics and stricter enforcement measures to identify discrepancies and recover lost revenue.
What’s Behind the Crackdown?
HMRC estimates that VAT fraud costs the UK billions each year, prompting a more aggressive approach to enforcement. The new measures include:
- Increased use of AI and data-matching tools to detect irregularities
- Unannounced inspections for high-risk businesses
- Harsher penalties for deliberate non-compliance
Who Could Be Affected?
Small and medium-sized enterprises (SMEs) are particularly vulnerable, especially those operating in cash-heavy industries like retail, hospitality, and construction. HMRC is also targeting online sellers and gig economy workers who may have underreported earnings.
How to Protect Your Business
Experts advise businesses to:
- Ensure accurate record-keeping and timely VAT returns
- Conduct internal audits to identify potential discrepancies
- Seek professional advice if unsure about compliance requirements
Failure to comply could result in hefty fines, legal action, or even criminal charges in severe cases. HMRC has warned that there will be no leniency for deliberate tax avoidance.
