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.
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.”
MSP plans to use new acquisition to expand its security offerings
Reseller also saw its operating profit fall five per cent in its financial 2017
Wendy Bahr to bring 18-year spell at networking giant to an end
AdEPT says latest purchase will push revenue beyond £50m