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21 Aug 2008
Comments:1
CPU trader Pure Trading Limited is to be paid its withheld VAT in full by HM Revenue and Customs’ (HMRC) in an out of court settlement.
Pure Trading Limited, helped by litigation support and advice firm CTM, initially received a negative decision from HMRC in July 2007 over its six-figure VAT repayment, where the money was held under the government’s Extended Verification anti-VAT fraud initiative, which has targeted mobile phone and components traders over the past three years.
The company ceased trading as the legal battle continued.
Further reading
However after months of legal wranglings and hundreds of pages of witness statements and documents, HMRC agreed to make full payment to the company together with interest and a repayment supplement, weeks before the case was due to go to court at the end of this month. CRN understands this figure will add up to around £300,000.
Matthew Jones, director of Pure Trading, told CRN: “I am extremely happy that it is all over. It has been a massive and unnecessary ordeal. Fortunately I was able to fight the case all the way, but a lot of traders in the same situation are unable to do the same. Two and a half years is a long time and I have had to put my life on hold.”
Jones added that he will not be resurrecting the company for the time being.
“It has knocked a lot of my faith in running a business in this country. At this moment in time I’m just happy that it is finally settled,” he said.
An HMRC representative said in a statement: "MTIC fraud has been a major threat to VAT revenues, costing £1-2bn in 2006/7. HMRC has a duty to verify VAT repayment claims submitted by persons suspected of trading in supply chains associated with MTIC frauds, to ensure that such claims are properly payable before they are repaid. Claims may be refused e.g. where the claimant knew, or should have known, that their transactions had facilitated the fraud.
"The UK courts to date have consistently supported HMRC’s policy and practice on verifications, accepting that lengthy verifications are justified, given the sums involved, the complexity of carousel supply chains, and the need in many cases to make enquiries of overseas tax authorities," the representative added.
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Do you agree?
Not surprised in the least
Not surprised in the least
As a Director running 3 small businesses in London, I am an easy target for HMRCs fishing expeditions, having just wasted a month of my life proving my innocence to HMRC. Companies at the smaller end of the market can?t assign teams of accountants and solicitors to fight their case, without it adversely affecting or even destroying the things worked so hard for. If SMEs in the UK are seen by HMRC as guilty first, we should demand that they pay for our legal and accountancy expenses in the event of abandoned investigations and harassment. In the event of destroying a company, a full years compensation for each employee.
Posted by Name and address withheld | 21 Aug 2008
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