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12 Jan 2006
The European Court of Justice (ECJ) has today ruled against HM Revenue and Customs (HMRC) in a case that will have widespread influence on the channel.
Back in April 2002, components wholesaler Bond House Systems lost a tribunal case against HMRC after it unwittingly became involved in VAT carousel fraud. As a result the firm had its multi-million pound VAT rebate withheld. Four weeks later, two other firms, Optigen Ltd and Fulcrum Electronics Ltd, suffered the same fate. All three companies appealed to the ECJ.
Earlier this morning, after a three-year battle, the ECJ ruled that those firms are entitled to have their VAT paid back in full.
A lengthy ECJ document stated: "The right to deduct input VAT of a taxable person who carries out such transactions cannot be affected by the fact that in the chain of supply of which those transactions form part, another prior or subsequent transaction is vitiated by VAT fraud, without that taxable person knowing or having any means of knowing".
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