Birmingham-based law firm Dass Solicitors claimed last week it has secured the first repayment from HM Revenue & Customs (HMRC) for VAT held from traders under its extended verification policy.
Dass Solictors said HMRC had repaid around £400,000 to one of its clients, having withheld the money indefinitely to carry out missing trader intra-community (MTIC) VAT fraud investigations into their supply chain.
HMRC withdrew its case two days before a hearing at Manchester VAT and Duties Tribunal in late July. The firm said the trader wished to remain anonymous.
The repayment is thought to be the first received by a trader affected by extended verification.
Dass Solicitors is thought to be close to securing a second repayment for a trader after a hearing at Birmingham VAT and Duties Tribunal, which could run to millions of pounds.
HMRC had VAT fraud allegations against traders Olympia and Livewire dismissed earlier this year. It had withheld repayments totalling almost £4 million across both businesses.
HMRC is to appeal both verdicts. HMRC won its case against trader Honeyfone, which had £5 million withheld. More cases are expected to be concluded soon.
Alias Dass (pictured) of Dass Solicitors said: "We have been successful in the first refusal of a VAT case since March 2006 where HMRC has agreed to repay the monies. We can confirm the VAT has now been repaid to the client and legal costs have been received.
"This is the clearest indication yet these cases are winnable if prepared properly and meticulously."
HMRC was unavailable for comment.