PNC issues court proceedings against HMRC

Reseller begins court action after waiting 18 months for six-figure VAT repayment from HMRC

In a David and Goliath style battle, the head of a mobile phone trader has issued court proceedings against HM Revenue and Customs (HMRC) as his fight to gain his VAT repayment passes the 18-month mark.

As CRN’s campaign to highlight the plight of traders caught up in HMRC’s Extended Verification process enters its fourth month, more UK traders are coming forward with their stories on the problems caused by the government’s VAT missing trader (MTIC) fraud crackdown.

Joe Case, director of London-based PNC Telecom, has been waiting since March 2006 for a £1.2m VAT repayment. His company has ceased trading and he is awaiting the date for a Judicial Review in the UK High Court.

Speaking to CRN, Case said the fight had cost £70,000 in legal fees so far and the cost is likely to escalate.

“I have quite literally had the worst 18-months of my life. We have been talking to lawyers and accountants non-stop,” he said. “What HMRC is doing is unlawful and it is literally killing the phone industry in the UK.”

Case said HMRC should look at other ways of stopping the fraudsters.

“Instead of punishing everyone in the industry, maybe HMRC should look at vetting the people that ask for VAT registration numbers and making sure they run their businesses correctly in the first few months,” he said. “It is not just the smaller firms suffering, well known companies are also being affected.”

One such company is believed to be Carphone Warehouse, which CRN understands has had dealings with HMRC over Extended Verification.

A Carphone Warehouse representative said in a statement: “The vast majority of our stock is bought directly from the manufacturers in the UK. However, we do exercise due diligence on the small percentage of stock we purchase on the open market. Naturally we are happy to co-operate fully with HMRC with their enquiries.”

HMRC declined to comment on PNC telecom or Carphone Warehouse, saying it did not comment on individual companies’ tax matters.

However it issued a statement to CRN, which said: “HMRC’s strategy to counter MTIC fraud has had a significant impact on the levels of trade associated with fraud. However, our Extended Verification work has little, if any, impact upon those whose trade is unconnected with MTIC fraud.”