HMRC loses Crucial appeal

Crucial Components wins five-figure VAT repayment from HMRC as case is ripped apart by defence

HM Revenue and Customs (HMRC) has been dealt yet another blow as a trader won an appeal to repay a five-figure VAT sum.

CPU and iPod trader Crucial Components appeared at the Royal Courts of Justice in London to argue its ‘means of knowledge’ appeal against HMRC, which had withheld more than £120,000 under its Extended Verification anti-VAT carousel fraud initiative since 2006.

The firm, which has since gone out of business as a result, was represented by litigation specialist CTM, which systematically took apart the HMRC case and sealed the victory.

It will now be paid back the withheld sum, plus interest.

Liban Ahmed, a former HMRC officer and now director of CTM, said: “This case had already gone through an appeal in 2008, and after this latest three-week trial the judge agreed there was no evidence to suggest they knew or should have known about a fraud in the supply chain.

“We forced two HMRC officers to give evidence, and the evidence was found wanting. Crucial Components traded in a perfectly reasonable way, the directors had nothing to hide and paperwork errors were just that – errors, and not suspicious at all.”

This victory is Ahmed’s second since the summer. Back in August, mobile phone and components trader Express Computers was awarded a £1m VAT repayment from HMRC after the case against it was ripped apart in court by Ahmed.

“The tide seems to be turning against HMRC,” he said. “These companies have to be given the opportunity for their case to be heard and we have to fight fire with fire. The judges appear to be realising that these are not normal MTIC (carousel) cases and need to be given a chance.”

An HMRC representative said in a statement: “We are considering the decision of the tribunal.”