Over the past year, many businesses have found themselves caught out by a fast‑moving type of VAT fraud. As we highlighted in our earlier Xeinadin insight (link), fraudsters have been exploiting the small window between VAT registration and the business owner linking their new VAT number to their own Government Gateway account. By moving quickly, criminals have been able to link VAT services to accounts they control and submit false repayment claims—sometimes before the genuine owner has even logged in for the first time.
Thankfully, HMRC has now taken action. From 19 January 2026, businesses must provide the VAT registration application reference number before VAT can be added to a Business Tax Account. This extra step is designed specifically to block the kind of unauthorised access we have been seeing and strengthens the enrolment process. (link)
Why this change matters
What is encouraging is that HMRC is targeting the exact weakness fraudsters were exploiting. Previously, if someone got hold of basic registration details, they could get ahead of the legitimate business and link the VAT number to their own Government Gateway account. Requiring the unique application reference number—something only the genuine applicant receives by email—creates a meaningful barrier and significantly narrows the opportunity for fraud.
What this means in practice
To make the most of the new protections:
- Keep your VAT application reference number safe and accessible—you will now need it to activate VAT services online.
- Continue to act quickly after VAT registration; even with this new safeguard, prompt action remains a key defence.
- Treat any error message when adding VAT services as a potential red flag.
- Stay alert to any unexpected HMRC correspondence, especially around repayments or access issues.
We are here if you need us
This update from HMRC is a positive step, but navigating VAT fraud risks can still feel daunting. If you need help reviewing processes, interpreting odd HMRC messages, or securing VAT registrations, the Xeinadin VAT team is only a call away.
