VAT refunds to be processed this week

VAT refunds will be processed again from this week as the investigation into allegations of serious fraud at the VAT department gathers pace.

Finance Minister Tonio Fenech said yesterday the department had scanned the pending batch of refunds and they would be sent to all clients in the coming days.

This was being done to ensure VAT-registered clients did not experience cash-flow problems. The vast majority were not implicated in any wrongdoing, the minister said.

Prominent business representatives had expressed concern over the decision to postpone refunds because of the investigation, warning it could aggravate cash flow problems being experienced by many companies.

Mr Fenech said the authorities would still be entitled to claim back any refunds if there was any suspicion of wrongdoing.

The minister would not be drawn into commenting on the ongoing police investigation into the three-way scam, which The Sunday Times is informed involved previously-convicted criminals, VAT department staff and businessmen.

Six employees have been suspended so far and some businessmen are believed to have received illegal refunds of up to €250,000.

It is understood that only refunds that exceeded €50,000 were being queried and verified by more senior officials within the department and reimbursements were being issued in figures below that amount to reduce the chances of the scam coming to light.