Changtel wound up after Enta owner loses HMRC battle
HMRC claims former Enta Group company Changtel owes £15.5m in VAT assessments over export transactions that never 'took place'
Liquidators have been appointed to Changtel Solutions after the owner of its former parent company Enta UK had his appeal with the Supreme Court dismissed.
Changtel Solutions, formerly known as Enta Technologies Ltd, has been embroiled in a long-standing battle with HM Revenue & Customers (HMRC) over 15 VAT assessments totalling £15.5m including interest.
HMRC alleges that since 2006, Changtel engaged in a number of export transactions that "never took place", and were used to "reduce to a minimal level what would otherwise have been a substantial VAT liability to HMRC arising from its normal trading", according to a Court of Appeal document.
In January HMRC won a case in the Court of Appeal to have Changtel wound up. Distributor Enta UK's founder and owner, Jason Tsai, then took the battle with HMRC to the Supreme Court, but in May three judges refused permission for this appeal to be seen "on the grounds that 'the application does not raise an arguable point of law'," according to a court statement.
Following this, the Supreme Court ruled the "Court of Appeal judgment will stand" and liquidators were appointed to Changtel by the secretary of state on 5 June, a notice in the The London Gazette showed.
But Tsai said this decision by the Supreme Court was an "injustice" and maintained, as he has previously, that the two accounting firms he employed – BDO and RSM Tenon (now Baker Tilly) – to look at its books in 2014 found no VAT is owed to HMRC.
"They overruled the appeal because they said there is no new proof. But what can we say, the proof is there from the video we gave them, the evidence we got from the third-party [accounting firms] report which we employed," he said.
"They [accounting firms] came to our computer systems and looked at what [we have] been wrongly accused of and they did a very thorough, forensic report, and they found there is no fault for this duplication of trend in VAT."
Tsai also denied any money was in fact owed to HMRC.
"Our dispute was we don't owe them any money, but they [HMRC] say we do. We pay everything; [we] never underpay, and never duplicate a claim."
Changtel - which was sold off to a third party in January 2014 – has sat dormant for nearly two years and has no assets or property, Tsai said.
When asked why Enta UK sold off Changtel (at the time named Enta Technologies Ltd), Tsai said it was to remove the connection between Changtel and the Enta Group and ensure the latter "has no liability".
Tsai – who was Changtel's only director and employee – said he sold the firm to a "business friend" in Taiwan for £600,000.
Despite the fact the alleged offences took place while Changtel was part of the Enta Group, Tsai maintains the £15.5m HMRC claims it is owed cannot be extracted from any other business within Entatech.
"The liquidator can only get what Changtel got, and because Changtel has no employees, no assets, [it does not] owe suppliers or customers, they can do very little. So my opinion is there is not much impact to the other companies because they are all different shareholders, different directors, [it is] totally independent and the company has been dormant for [more than] two years," he said.
"They [HMRC] have no power to do anything now it [Changtel] is liquidated by a private accounting company. I contacted them [the liquidators] and they have no power to ask them to do anything else. HMRC has no power to say to the liquidator 'you need to do this or do that'; no one can do that. They will do it independently, what they think is right or wrong, on their own course, and that means no one can bias them."