If your business “knew or should have known” that a transaction was fraudulent you may be implicated in the fraud. Where transactions are connected with fraud you could:
- Lose entitlements to claim VAT on purchases; or
- Be liable for Irish VAT on previously zero rated intra community supplies.
This can happen even if the business did not profit from the fraud. Revenue will also apply additional penalties where considered appropriate.
Revenue expects businesses to carry out due diligence on their unknown customers and suppliers to protect themselves using steps such as:
- Obtain copies of the Certification of Incorporation, VAT registration etc;
- Verify VAT registration via http://ec.europa.eu/taxation_customs/vies/;
- Obtain some form of written and trade references;
- Obtain credit and background checks from an independent 3rd party;
- Make personal contact with a senior officer of the prospective supplier and/or make a visit to their premises whenever possible.
Full details are available on the Revenue website.
If you require help with any matters raised in this article please email firstname.lastname@example.org