New EU VAT Fraud initiative – The “TNA” tool

The EU Commission has just announced the launch of a new tool in its fight against VAT fraud. This “tool” is known as the “Transaction Network Analysis” (TNA). The TNA is a cross-border information exchange system that will allow rapid exchange and analysis of VAT data so that VAT carousel fraud can be detected and intercepted much more quickly than heretofore. The cost of VAT fraud is estimated to be €50 billion per annum, and this initiative is part of the drive by the EU Commission to combat it.

How will the drive to combat VAT fraud affect my business?

Allied to the continuing efforts to combat VAT fraud is the requirement to file VIES returns (European Sales Listings) on time. Businesses will have been aware in recent years of a more stringent approach by Revenue regarding VIES and INTRASTAT returns. Whereas in the past a softly-softly approach had been employed by Revenue in this regard, nowadays VAT repayments are being withheld, significant penalties are being imposed and in a certain number of cases, prosecutions have been initiated. The failure to file one’s VIES returns in a timely manner nowadays puts one at risk. Care should be taken to ensure that one keeps one’s VIES returns up to date in order not to fall foul of the EU wide push for greater transparency in relation to cross-border supplies in order to combat fraud.            

How to protect my business from becoming involved in VAT fraud?

The consequences of unwittingly getting caught up in VAT fraud can be severe, from losing entitlement to VAT input credit, becoming liable for Irish VAT on previously 0% supplies of goods to the other EU Member States, to the imposition of additional penalties by Revenue, where appropriate.

The main defence against this happening is normal commercial vigilance, when dealing with new customers in the other Member States and always checking the VAT numbers provided by these traders using the EU VIES VAT number verification website (see link below)

ec.europa.eu/taxation_customs

Revenue has published guidance in November 2018 which gives useful guidance in relation to the various commercial checks that Revenue will expect the trader to have undertaken to minimise the risk of fraud  

Obligations-records-protect-your-business-from-vat-fraud.pdf

In summary, when involved in cross-border trade one needs to be very aware of the risks of non-compliance regarding VIES and also the risk of unwittingly becoming involved in missing trader fraud.

If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars VAT team below:

Staff Member

Position

Email

Telephone

Frank Greene

Tax Partner

fgreene@mazars.ie

01 449 6415

Alan McManus

Tax Director

amcmanus@mazars.ie

01 512 5525

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