When dealing with the VATMOSS fiasco, laughs are few and far between, so I did enjoy this contribution to the weekend’s online debate over whether or not letters from Dublin demanding insane amounts of money were a scam or some Irish Revenue office cock-up.
Meantime, it’s now been established that the letters did indeed come from the Irish Revenue but no, they’re not actually demanding that money. They were apparently generated by a system error and an investigation is underway. Apologies will be forthcoming. So that’s that, okay?
Actually no, it’s very far from okay, and let’s not just draw a line under it and move on.
Not when members of the EU VAT Action Team and of the HMRC Digital VAT Working Group had their weekends so thoroughly disrupted by all this – along with the HMRC officials trying to get answers for us.
Not when these letters have generated so much concern and annoyance. Some recipients getting demands that weren’t for tens of thousands of Euro genuinely thought they were in danger of being aggressively pursued for a mistaken debt, while those convinced this was all a scam were very worried indeed about the data breach presumably indicated by the amount of genuine and supposedly confidential information in these letters about them and their businesses.
And if I was an Irish tax payer, I’d very much want to know how much money has just been wasted on printing and posting hard copy letters internationally to potentially ten thousand or so companies.
This is the second time a ‘computer glitch’ has generated a batch of bogus letters. After the first quarter’s VAT returns, the German tax system sent notifications to companies in the UK and the Netherlands with details of the tax office in Kleve they’d be required to deal with, complete with reference and registration numbers for all future correspondence. Once again, opinion was split between scam or screw-up – along with those genuinely worried that they were now required to deal with a tax office in a different country and language.
Because we cannot safely dismiss any such letters as a scam. The assurances we were given back in January that any queries from foreign tax authorities would be directed through HMRC have proved worthless. Small businesses in the UK have been contacted direct by tax offices from Sweden, Germany, Denmark and Luxembourg so far, over discrepancies in their VATMOSS returns for as little as five pence sterling. Yes, really.
Though doubtless some people who aren’t following all this debate online still believe that assurance from HMRC. What’s going to happen when one of them bins what turns out to be a genuine letter sent direct to them? How much trouble will they find themselves in, for wilfully failing to respond, as punitive interest is added to what they might owe?
On the other hand, what’s going to happen when some sophisticated scammer sends out a few hundred thousand emails using publicly available data gathered from Companies House, because some of those will be registered for VATMOSS, right? And some of those will be persuaded that they are somehow required to pay a non-ridiculous but non-trivial sum of money. Especially those operating at the small-scale, direct e-commerce end of the businesses all caught up in this. People without accountants and without much experience of either governmental cock-ups or the increasingly common online scams.
And what does this say about the VATMOSS systems we’re supposed to rely on, as we invest hundreds of pounds and hundreds of hours of lost working time attempting to comply with this legislation? It’s already apparent these rules were devised by people with a wholly inadequate understanding of the Internet and direct e-commerce. Now it looks like the computer systems handling all this have been put together and run with a similar lack of skills.
Let’s not even get started on the problems people across Europe have trying to get answers out of their tax authorities when something like this happens. Callers to the HMRC fraud line this weekend found themselves talking to staff who had no clear idea what VATMOSS might be, still less how scammers might be misusing it.
This entire scheme is not fit for purpose. The EU Commission has already acknowledged the regulations need reviewing and a turnover threshold applied. That process could take up to two years.
So far, so good, but meantime, it is wholly unacceptable to insist that businesses continue to try to comply, using these VATMOSS systems which are now inspiring zero confidence.
These regulations need suspending with immediate effect until a system that’s proven to be fit for purpose can be agreed.
The EU VAT Action Team will continue to represent the interests of all those online businesses and traders who were never consulted, still less considered, when this legislation was devised.