The sight of a brown envelope landing on the doormat has often been met with a weary groan, the sign of another bill that needs paying. However, few will have experienced the same horror as Dylan Davies, who received 11,000 tax bills – with none actually for him. On one day, 580 envelopes flooded in, as Chinese companies had used his Cardiff flat address to register themselves with HMRC to pay VAT. The overall debt came to £500,000, Davies told the BBC. Even worse, the error was not picked up by HMRC’s internal systems. “It’s been horrendous,” he said. “You’d think there’d be a systems with the technology today that would have picked it up immediately.” He informed police and HMRC, but the bills kept on coming and HMRC did not respond, the Times reported. Action Fraud said it was “unable to identify a line of inquiry”. Most of the firms were online businesses without any presence in the UK.
It was made worse when letters started to arrive from debt collection agencies, causing him to fear that bailiffs might arrive at his home to try to seize some of his possessions, or worse, have his house taken away. “I had images of debt collectors breaking down the door and seizing the TV,” he said. HMRC’s permanent secretary, Jim Harra, said 2,356 of the 11,000 businesses registered at the address owed it money. Harra said systems had been put in place to stop Davies being sent more letters or businesses registered to his address. However, he added investigators “so far have found no evidence of fraud or fraudulent intent”. In evidence to parliament’s public accounts committee he said that investigations continued. A law change in January 2021 meant online marketplaces such as Amazon or eBay have to collect VAT from overseas traders themselves and pay it directly to HMRC. However, this does not apply if a company has a registered UK address for VAT. No proof of address has to be provided. The financial crime consultant Graham Barrow said he suspected it was fraudulent activity from the overseas companies. “It looks to all intents and purposes like VAT fraud,” he said. “There’s no other reason why you’d register for VAT at a complete stranger’s address, particularly for 11,000 companies to do that.” Barrow believes the firms are collecting VAT from their buyers but not paying it to HMRC. Davies said: “[They] need to tighten up completely. [It’s] easier to register a company for VAT than it is to go and get a bus pass.”