FTI admits defeat in HMRC VAT battle as funds dry up
Organisation sends email informing members of its demise
HMRC has been accused of causing unnecessary delays to appeals process
A national flag-flyer for battered CPU and mobile phone traders caught up in HM Revenue and Customs’ (HMRC) lengthy VAT fraud crackdown has fallen by
the wayside.
The Federation of Technological Industries (FTI), originally set up in 2003 to
help traders get their VAT payments returned by the government, has run out
of money.
In an email sent to its members and followers on 25 May, estimated to be some 350 companies, Fred Howath, chairman of the FTI, said: “I am sorry to say that the FTI is unable to continue supporting your appeal in the VAT and Duties Tribunal. The FTI is unable to raise the further funds necessary to allow it to continue.”
It added: “When we started this journey we knew it would be a long haul, but where we are today is still so far from the finishing post that it is no longer attractive to investors… I assure you I am as disappointed as you, but the FTI has reached the end of the road.”
Dave Fisher, managing director of semiconductor trader Silicon8, which is still awaiting a six-figure VAT repayment after nearly four years, said the FTI’s demise will hit many firms hard.
“A lot of traders paid about £1,500 upfront to be part of a group action with the FTI. Now we are going to have to pay again. My experience with the FTI has not been positive.”
Fisher said he was in talks with litigation and tax specialist firm CTM to negotiate a special deal for former FTI members.
Liban Ahmed, director of CTM, which is largely made up of former HMRC investigation officers, said CTM was aware of the situation and is prepared to offer a discount to former FTI members.
“The whole process has been so long that the FTI just ran out of money,” said Ahmed. “It thought that taking a payment of £1,500 to £2,000 from each trader would be enough to get through a quick trial, but the average case is costing £100,000 and some are as much as £700,000. The FTI suddenly realised that these are very long trials.”
Ahmed said there are an estimated 900 cases outstanding at present and it will take a minimum of 17 years to sort them all out.
Anthony Elliott-Square, a former chairman of the FTI, said it was a shame the organisation had folded.
“The challenge faced by the FTI included trying to get a joint action together and helping people through the appeals process. HMRC is well known for not making a decision and, for the past four years, it has been delay, delay, delay,” he said.
“Hundreds of companies have gone into liquidation as a result and now the remaining traders have to find other ways of helping them through the process. The FTI did well considering the resources it had.”
CRN contacted HMRC for comment about the FTI, but was told it “cannot comment on named individuals or businesses”.
In a statement, HMRC said: “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 supply chains and the need in many cases to make enquiries of overseas tax authorities.”