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16 Jan 2009
Comments:1
HM Revenue and Customs (HMRC) has been dealt a sucker punch by the High Court over its appeal against Livewire Telecom’s VAT payment.
Originally HMRC was ordered to pay back all the withheld VAT that it had kept under its disliked ‘Extended Verification’ strategy, aimed at fighting VAT carousel fraud within mobile phone and components traders in the UK.
As a result, HMRC lodged an appeal with the High Court and had been waiting for the result of that for almost a year.
Further reading
However today, the High Court dismissed HMRC’s appeal, which could send a spark of hope to all the hundreds of other traders that are waiting for money to be paid back.
At this stage it is unclear whether HMRC will lodge another appeal, but one industry expert said it will force the government to re-examine its VAT strategy.
Don Mavin, head of disputes and litigation at accountancy, tax and business advisory firm Vantis, has been working on the case along with David Scorey of Essex Court Chambers, London, and was assisted by John Day of Malletts Solicitors, London.
Mavin said: “This judgement has cleared away a lot of uncertainty and myth that has been surrounding European decisions on VAT.
“I wouldn’t say it will open the floodgates because HMRC will be reviewing this judgement in details and all cases affected by it. However, it is still a positive judgement.”
An HMRC representative sent CRN a comment which reads:
“The judgment agreed with HMRC that the correct legal test had not been applied by the tribunal and supported HMRC’s interpretation as to how the test is to be applied in practice.
"In the case of Livewire Telecom the court decided that the findings of fact by the tribunal meant that even applying the correct legal test the tribunal’s decision stands. However in the case of Olympia Technology Ltd the court found the tribunal should reconsider the case using the correct legal test.
"HMRC is right to tackle fraud in this way and will continue to make decisions to deny input tax where a trader knew or should have known that its transactions were connected with fraud and will continue to robustly defend its position in the Courts.”
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Do you agree?
Flood Gates Are Wide Open - Thanks!
I live in Stoke-on-Trent where this fraud started off. The extended verification is the only thing that stopped the practice - now that has been challenged again it will definately open the flood gates - it did last time - the carousel fraudsters had a party. New chains grew overnight. And why not? They can make millions in just a week. Remember, these people form part of organised criminal gangs - some have been linked to kidknapping and violent assault. The problem is so bad that they're making a film about it in stoke. At a time when our country is in crises I would have hoped for more good news - but alas another win for the bad guys. Maybe as tax payers we ought to refuse to pay tax on account of the banks throwing it away and carousel fraudsters dipping their hand into BILLIONS of pounds of our money, that would have otherwise have been spent on public funds (caring for the elderly, abused children, police). Clearly those helping such people have no conscience or foresight and will stop at nothing to make money. Yet another reason to leave Britain which many feel has gone to the dogs. God save the Queen (because nobody else will)
Posted by Jim Brian | 17 Jan 2009
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