Major VAT fraud appeal in High Court


The High Court heard an appeal from HM Revenue and Customs (HMRC) this week against major VAT fraud wins for traders in the VAT and Duties Tribunal earlier this year.

Traders Livewire and Olympia both secured significant victories against HMRC over withheld VAT repayments in the VAT and Duties Tribunal earlier this year. The rulings were considered, then, a blow to HMRC’s policy of withholding VAT repayments from traders because of their ‘means of knowledge’ of fraud elsewhere within their supply chain.

HMRC appealed both VAT and Duties Tribunal decisions jointly. Its appeal was heard this week in the High Court.

Traders dealing in mobile phones and computer chips have been crippled by the HMRC policy, put in place to fight the cost to the public purse of missing trader VAT fraud. Losses to HMRC due to missing trader fraud are estimated at £2.5–4.5 billion in the 2005/6 tax year.

The High Court’s ruling on the appeal this week, expected February, could affect whether several hundred million pounds in VAT repayments are made to over 1,000 traders, all with VAT repayments withheld under HMRC’s ‘means of knowledge’ policy.