Following months of speculation, the final judgement on a landmark court case against HM Revenue and Customs’ (HMRC) clampdown on VAT missing-trader (or carousel) fraud is due next month.
Last week the Federation of Technological Industries (FTI) revealed that the ruling of the European Court of Justice (EJC) over the Bond House Systems case is to be revealed on 12 January.
Back in April 2003, components wholesaler Bond House Systems lost a tribunal case against HMRC after it unwittingly became involved in carousel fraud. As a result, the firm had its multi-million-pound VAT rebate withheld. Four weeks later, two other firms, Optigen and Fulcrum Electronics, suffered the same fate. All three companies appealed to the ECJ.
In February the case appeared to take a turn against HMRC when the Advocate General issued a positive official opinion on the case . However, fears that the HMRC could use harsher methods to extract VAT money due through the supply chain increased as a result (CRN, 28 February).
Channel players are concerned that they could be heavily penalised even if they unwittingly become caught up in a chain of VAT fraud.
Anthony Elliot-Square, chairman of the FTI, which has been supporting Bond House Systems in the case, said: “We are hoping that the final judgement is in line with the Advo-cate General’s opinion. This has been a landmark case, and if the final decision is made in the companies’ favour it means they will get their money back from HMRC.
“This in turn will give the IT industry more confidence in the judicial system because an injustice on a grand scale will have been righted.”
However, Elliot-Square stressed that IT suppliers must remain “over 120 per cent professional” and ensure they have done all they can to avoid being involved in fraudulent activities.
David Alexander, partner at accountancy firm Alexander Forensic Accounting, said the ruling will be “crucial” for the industry.
“There are some firms that feel hard done by because they entered into transactions with good intentions and this could mean they will get their money back,” he said.
HMRC refused to comment at the time of going to press.
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