JSL4340 - Establishing whether the JSL measure should be applied: Establishing whether the taxable person 'knew or had reasonable grounds for knowing': Other features

Are there any other features of the general conduct of the business and its pattern of trade that are inconsistent with normal commercial practice or which indicate that the taxable person’s trading is artificially contrived? Examples of such indicators might be:

• exceptional short-term turnover growth, not supported by any apparent justification such as previous involvement in the industry, major investment in the company, innovative products or services etc
• links, in terms of personnel, company ownership or funding, to other taxable persons within the same supply chains (i.e., supply chains in which the fact of fraud has been established)
• dealing in specified goods in respect of which the taxable person has no product or technical knowledge
• timing anomalies within the conduct of transactions - e.g. goods released to customer prior to purchase from supplier
• sales and purchase transactions often completed ‘back to back’ on the same day
• goods not insured, or insured for much less than their purported value
• goods not inspected by the taxable person or on his behalf
• taxable person failed to record International Mobile Equipment Identity (IMEI) or other relevant serial numbers for goods traded
• buying or selling goods (wholesale) for more than the prevailing retail price.

Examples of the steps taxable persons should consider taking to avoid being caught up in a supply chain where VAT goes unpaid can be found in Notice 726 Joint and several liability for unpaid VAT.

Further indicators can be found in section VATF60000 of the VAT Fraud guidance manual.