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If you or somebody close to you has been charged or arrested in connection to VAT fraud, you will probably be feeling very stressed, confused, worried and concerned about what’s going to happen.
In addition to the police making an investigation, you’re likely to hear from one or more of these agencies:
- Serious Fraud Office (SFO)
- National Crime Agency (NCA)
- Office of Fair Trading (OFT)
- HM Revenue and Customs (HMRC)
- Department of Trade and Industry (DTI)
These cases can be financially and operationally crippling to any business. Putting a legal team in place who are familiar with liaising with the above in addition to the police is vital to craft a strong defence from the outset is critical to achieving a positive outcome.
VAT fraud is an area that hard to defend as it’s incredibly complicated. Only legal professionals who specialise in this area of law can provide a strong defence.
The two acts that VAT fraud charges are brought under are the Fraud Act 2006 and Section 72 of Value Added Tax Act 1974.
There are several offences for which you may be accused, including:
- Tax evasion
- Money Laundering
Either of these challenges may be involved in your case. It’s vital that you have a competent and experienced legal team who can support you and skilfully defend you. These types of investigations involve huge amounts of evidence and are typically lengthy and complex. It’s likely that your assets could be frozen with a Restraint Order or you may be at risk of a being subject to a confiscation order or cash seizure order.
To help you to understand what the outcome might be as a result of being convicted of a VAT fraud offence, we’ve detailed the sentencing guidelines. Please note that a competent and experienced solicitor may be able to get a prison sentence reduced or even avoid it entirely.
Read more information about the offence of Vat fraud
What type of actions are considered VAT Fraud?
Here are some examples of VAT fraud that may have led to the situation at hand.
Asking customers to pay cash – this is so that they can avoid paying VAT either on a job or a sale of an item
Asking customers not to pay the business – for example, requesting a customer to pay somebody else, or to make several payments to different companies or people
Not being registered for VAT – if you own a business, or you make over £85,000 a year as a sole trader, you are required to register for VAT.
Claiming to have applied for a VAT number – even if a person claims to have asked for a VAT number, but they haven’t got one, they are breaking the law.
Using a VAT that is fake or belonging to somebody else – for instance, using a fake number or a number that isn’t yours is against the law.
Not paying VAT when you are required to is a form of tax invasion and taken very seriously by HMRC.
What is the average sentence for VAT fraud?
If your case reaches court and you are convicted of VAT fraud, you may be sentenced for a maximum of 7 years and receive a fine of up £20,000. Conspiracy to defraud carries a sentence of 10 years maximum.
Sentencing is decided on how much you defrauded the HMRC by and how culpable you are. The term is calculated by using the following two pieces of information. An example of this is Category 4 and culpability A would result in a term starting at 5 years and 6 months.
Very minor cases such as category 7 with a culpability of C may result in a term of community service. Community service sentences can range between 40 and 300 hours of work based on how serious the case is including culpability and how much money is involved.
The following is an extract taken from the Sentencing Guidelines which are provided to judges to help them decide on penalties.
The level of culpability is determined by weighing up all the factors of the case to determine the offender’s role and the extent to which the offending was planned and the sophistication with which it was carried out.
Culpability demonstrated by one or more of the following
A – High culpability
- A leading role where offending is part of a group activity
- Involvement of others through pressure, influence
- Abuse of position of power or trust or responsibility
- Sophisticated nature of offence/significant planning
- Fraudulent activity conducted over sustained period of time
- Large number of victims
- Deliberately targeting victim on basis of vulnerability
B – Medium culpability
- A significant role where offending is part of a group activity
- Other cases that fall between categories A or C because:
- Factors are present in A and C which balance each other out and/or
- The offender’s culpability falls between the factors as described in A and C
C – Lesser culpability
- Involved through coercion, intimidation or exploitation
- Not motivated by personal gain
- Peripheral role in organised fraud
- Opportunistic ‘one-off’ offence; very little or no planning
- Limited awareness or understanding of the extent of fraudulent activity
Where there are characteristics present which fall under different levels of culpability, the court should balance these characteristics to reach a fair assessment of the offender’s culpability.
Harm
Harm is initially assessed by the actual, intended or risked loss as may arise from the offence.
The values in the table below are to be used for actual or intended loss only.
Intended loss relates to offences where circumstances prevent the actual loss that is intended to be caused by the fraudulent activity.
The following is an extract taken from the Sentencing Guidelines which is referred to by judges when making decisions on penalties.
Risk of loss (for instance in mortgage frauds) involves consideration of both the likelihood of harm occurring and the extent of it if it does. Risk of loss is less serious than actual or intended loss. Where the offence has caused risk of loss but no (or much less) actual loss the normal approach is to move down to the corresponding point in the next category. This may not be appropriate if either the likelihood or extent of risked loss is particularly high.
| Harm A – Loss caused or intended | ||
| Category 1 | £500,000 or more | Starting point based on £1 million |
| Category 2 | £100,000 – £500,000 or Risk of category 1 harm | Starting point based on £300,000 |
| Category 3 | £20,000 – £100,000 or Risk of category 2 harm | Starting point based on £50,000 |
| Category 4 | £5,000 – £20,000 or Risk of category 3 harm | Starting point based on £12,500 |
| Category 5 | Less than £5,000 or Risk of category 4 harm | Starting point based on £2,500 |
| Risk of category 5 harm, move down the range within the category | ||
How does a court decide on the seriousness of the VAT fraud offence for sentencing purposes?
The information that judges are given with regards to sentencing are only guidelines, and each case will be looked at individually. One of the primary factors that judges consider in every case of this nature is the defendant’s level of genuine remorse.
The following factors are considered when the court decides which sentence to give. The court will look at:
- Your previous conviction(s)
- Your level of remorse
- Your level of cooperation with the investigation
- Whether the activity you took part in was originally legitimate
- Your reputation / good character
- Whether you have any serious medical conditions that require long term, urgent or intensive treatment
- Whether you have a learning disability or a mental disorder
- Whether you are the sole or primary carer for related dependents
What are some of the mitigating factors that might reduce the VAT fraud sentence?
When a tax investigation takes place, it can typically expand as other areas of your tax affairs may also need to be examined. For example, corporation tax, personal tax and more. The role of the VAT fraud solicitor will be to guide you on what to do and say if you’re being asked for too much information from the HMRC.
Certain aspects of a case are known as the mitigating aspects which can influence the sentence that a judge gives. In VAT fraud cases, they may include:
- Whether the defendant is disabled or mentally ill
- The age of the defendant, i.e. if they are particularly young their age may affect their level of responsibility
- If there are previous, relevant or recent convictions
- Suspect shows a considerable level of genuine remorse
- A previous good character with exemplary conduct
- If there is a learning disability or mental disorder linked to this offence
- There have been demonstrative steps made to address this behaviour
Is it possible to reduce a sentence for VAT fraud with a guilty plea?
In recent years, a number of changes have been made to the sentencing system in the UK to save the court time and cost and to protect witnesses from the stress of needlessly going through a trial. For offenders aged 18 and over, pleading guilty early on in a case can reduce a sentence by as much as one third (maximum). The later the plea is entered, the smaller the reduction.
‘Early on’ refers to ‘the first stage of the proceedings’ and means anytime up to and including the first hearing at the Magistrates Court or Crown Court for indictable offences.
If a plea is entered 14 days after the first hearing, for example, the maximum level of reduction is just 20% or one fifth of the sentence. For indictable offences, the limit for a guilty plea to be made is within 28 days after the prosecutor has stated compliance with section 3 of CPIA 1996 and serving disclosure; although the decision is ultimately in the hands of the Judge who has discretion to apply whatever credit is deemed appropriate.
After these times there is a sliding scale of credit applied. This goes down to one tenth on the first day of the trial and to zero if entered during the course of the trial. In theory, the ten percent could be given if the plea is issued after the opening speeches on the first day, but prior to any witness evidence being heard.
If the accused does not want to plead guilty, then it’s important for the solicitor to regularly inform the court throughout the trial of the reasons why the client’s plea is not guilty.
What are some of the other consequences of VAT fraud offence?
Ancillary Orders
A court can also make ancillary orders on a defendant if they are found guilty and convicted of an offence. These are extra elements that can be added to a sentence and include additional restrictions or requirements that affect a dependent’s finances, property or activity.
Ancillary orders that are typically added to the penalty for those who are found to be guilty of VAT fraud include:
- Disqualification from operating as a company director
- Serious crime prevention order
- Restraint orders
- Financial reporting order
- Confiscation orders
As part of your investigation, you may also have your assets frozen with the possibility of having cash or other assets seized.
In addition, the court may demand payment of the following if the accused is convicted:
Payment of costs applied for by the prosecutors
Although the police meet some of the costs involved in the prosecution, the costs of investigation are typically sought from the convicted. These may include the costs of:
- The work done in obtaining sufficient evidence for prosecution either at the initial stage or later at the request of Crown Prosecution Service (CPS)
- Seeking medical or expert evidence as part of the investigation, (where a witness is required to attend Court, the cost of the attendance falls on the CPS).
- Re-interviewing witnesses
- The entire costs of the prosecutor, including fees for the use of external Barristers used by the CPS, can be recovered from the defendant, subject to means. At the end of the case, the prosecutor under The Prosecution of Offences Act 1985 will request the Judge to order a sum to be paid for the costs incurred by the prosecutor in bringing the prosecution.
Victims surcharges
The term victims’ surcharges can be explained as paying compensation to a fund for victims and can range between £20 to £170 depending on what sentence you were given at conviction.
How sentences can be added to national information databases
There are several national databases that hold information about individuals and any allegations made about them, their criminal and court records. These include the DBS (Disclosure and Barring Service) which was previously known as the CRB (Criminal Record Bureau) and the Police National Computer (PNC). Depending on what happened, whether the accused is convicted and what sentence was issued, the accused may be added to one or all these databases. Their purpose is to provide information to potential employers and to regulate the ability to take part in certain activities.
If your case progresses to court and you are convicted of VAT fraud and defrauding the HMRC tax office, your conviction will be noted on your CRB / police record. The period of the endorsement will depend on the nature and length of your sentence.
Below are details on how long you will be listed as holding a criminal record if convicted. This is something very serious to consider when it comes to future employment. The term ‘spent’ refers to when your name can be removed from the databases.
| Rehabilitation Period (the time it takes for the sentence to become ‘spent’) |
||
| Sentence | Adult (aged 18+) at time of conviction | Young person (aged under 18) at time of conviction |
| Prison sentences of more than 4 years | Sentence is never spent | Sentence is never spent |
| Prison sentences of more than 2.5 years (30 months) but less than 4 years | Sentence length 7 years | Sentence length 3.5 years |
| Prison sentences of more than 6 months but less than 2.5 years (30 months) | Sentence length +4 years | Sentence length +2 years |
| Prison sentences of less than 6 months | Sentence length + 2 years | Sentence length +18 months |
| Conditional Discharge | Length of order | Length of order |
| Absolute Discharge | None | None |
| Conditional Caution | 3 months | 3 months |
| Simple Caution / Youth Caution | None – immediately ‘spent’ | None – immediately ‘spent’ |
| Other Including Compensation Order, Supervision Order, Bind Over, Hospital Order | Length of the order / once compensation is paid | Length of the order / once compensation is paid |
How Can Stuart Miller Solicitors Help?
Being either investigated or prosecuted in relation to a VAT fraud case is frightening. It’s vital that you are represented by a specialist legal team. At Stuart Miller Solicitors, we have a competent and experienced team of solicitors and legal support specialising in VAT fraud and tax evasion cases. We also boast an extensive understanding of the Criminal Justice Act and have experience representing defendants in this complex area of law.
Our expert fraud solicitors are known for their strategic thinking and knowledge of the law concerning VAT fraud cases. We are aware of the crippling effects and devastating consequences of these investigations and will allocate a team of lawyers to apply defensive measures from the outset.
These investigations are lengthy, complicated and soaked in vast volumes of evidence. It is vital to have legal advice from the early stages as the investigators will usually apply for Restraint Orders to freeze your assets without notice. Such restraints could affect your home, your family and cause devastating losses to any legitimate companies caught up in the deal.
We believe the foundation of excellent representation is ensuring you understand the offence that you face and knowing what to expect throughout each step of your case.
Arrest & Interview
If you are arrested and taken to the police station, the next step for the police will be to interview you. Under no circumstances must you attend this interview without being accompanied by a legal advisor. The police are trained in how to interview you so that you may even incriminate yourself. A legal advisor will tell you what you should and shouldn’t say. They will also ask whether there is further evidence against you that has yet to be declared by the police.
Our VAT fraud solicitors have immense experience in handling business crime and dealing with international jurisdictional issues. We have a culture of pursuing every line of enquiry, whether in the UK or abroad. Motivated by the desire to achieve results, you will find our VAT fraud lawyers eager to secure vital evidence and speak to witnesses right at the very outset. We are commercially aware, are familiar with different rates of VAT, understand the rates on different types of goods or services and those matters qualifying for exemptions.
Our tax fraud solicitors are especially trained on company law to understand the roles, responsibilities and mandatory duties of Directors, Shareholders and other Officers of companies. We are prepared to scrutinise the network of UK and foreign companies, the large numbers of individuals, the enormous volumes of records and the highly likely computer/telephone evidence which will be essential features in your case.
Close relationships with phenomenal Barristers and QCs allow Stuart Miller Solicitors to engage Counsel from the very beginning of your case. We select Barristers based on ability, legal knowledge and experience.
In circumstances where the impact of an investigation and prosecution will affect your future, your families’ future and that of your financial security; we bring to you a fraud defence team which is modern, dynamic, engaging and dedicated to helping. We don’t propose tired, old-school Lawyers, out of touch with the changes in the law and developments in technological evidence likely to be a large feature in your case. We propose energetic VAT Fraud Solicitors, who practice exclusively in defence of VAT fraud cases, are up to date with relevant legal developments and desperate to find supporting factual evidence or legal arguments which could be the key to success.
In a crisis of this nature, it’s critical that you take advice and guidance from a specialist VAT fraud solicitor. Ideally, they will have experience in white-collar crimes and business fraud. If you decide not to take legal advice, you could be setting yourself up for imprisonment or a large fee, even if you aren’t guilty of VAT fraud.
In some cases, you may be accused or carousel fraud, which is when goods are brought into the country from an EU member state without VAT having been paid on them. The goods are then sold and VAT is charged. The person who traded them then typically disappears taking the VAT with them, without paying it to HMRC. Another term for this crime is ‘acquisition fraud’.
The UK authorities have an interest in Carousel fraud and spend a lot of time trying to catch out those who are guilty of it. Huge gains can be made from this offence and it’s typical for the HMRC to accuse directors of legitimate businesses falsely.
Would you like to discuss your case before instructing us?
If you’d like to have a no-obligation chat with us before you instruct us to take your case, then call us today.
In addition to giving you a free consultation, we can also represent you at the police station if you’ve been arrested. We can look at securing your legal aid.
Please Contact Us and ask to speak to our VAT fraud lawyers and tax evasion solicitors to arrange a meeting in person, online or by telephone. If you prefer, you can WhatsApp us from the link you will find at the bottom banner if you open this page on your mobile phone device.
Get in touch with us now for VAT fraud legal help.
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