HMRC 'withholding VAT refunds'

Businesses in the UK are suffering because HM Revenue & Customs (HMRC) is delaying the payment of value added tax (VAT) rebates, it has been claimed.

According to the Telegraph, many companies are waiting for thousands of pounds worth of VAT refunds which are currently being held in limbo by HMRC's ongoing investigations into carousel fraud.

Mobile phone and computer chip firms have been hit particularly hard by the delay because carousel fraudsters tend to base their operations in these industries.

Tax consultant Martin O'Neil commented: "We know that fraud exists but it doesn't follow that everybody should be tarred with the same brush."

Peter Carnall, owner of mobile phone export company Eurostar Global, told the newspaper that his business is owed about £114,000 in VAT payments from HMRC.

Also known as missing trader fraud, carousel fraud occurs when criminals buy goods VAT-free in other EU states before selling them on at a VAT inclusive price and disappearing with the extra money.