Receiving a Kittel VAT notice is something that businesses dread.
HM Revenue and Customs (HMRC) can demand the repayment of tax already reclaimed, and this can sometimes amount to a significant amount of money.
The notice comes when a trader “knew or should have known” their transaction was linked to fraudulent evasion of VAT.
This makes the trader ineligible for a deduction of input tax.
Kittel VAT can seem like an ever-present threat hanging over traders, but there are ways to reduce the risk.
How do Kittel VAT notices get issued?
To issue a Kittel VAT notice, HMRC must establish three key elements. They need to determine that:
- VAT was fraudulently evaded
- The trader’s transaction was connected with that fraud
- The trader knew, or ought to have known, of this connection
If any of these components is missing, a Kittel VAT notice will not be issued.
How to avoid Kittel VAT notices?
Due diligence is the best way to avoid Kittel VAT notices.
Conducting necessary checks should be part of your anti-money laundering processes to avoid engaging with conduct that will leave you vulnerable to Kittel VAT notices. This includes always conducting robust supply-chain due diligence and ensuring you understand the nature of all transactions made by your business.
If you have any doubts, it is best to raise concerns immediately, as it may not just result in a Kittel VAT notice, but more severe instances of fraud.
You may be treated as an accomplice to this fraud if you do not perform sufficient due diligence.
Reduce the threat of the Kittle VAT notice, speak to our team today.
