Devika: Costly waiting game for traders


We’ve been here before, many times. Traders are hopeful a new court ruling will open floodgates and see VAT witheld by Customs returned to them. One thing is for sure, if we have learnt anything in this saga, there will be no great repayment to traders.

Customs’ strategy is neccessary to stop carousel fraud and robbery of the public purse, but it is plainly flawed also. Many traders facing lengthy and expensive court battles for witheld VAT funds are innocent.

They are defending themselves against a loose interpretation of a ‘means of knowledge’ test, first implemented by Brussels in the Axel-Kittel case.

The import/export trade and Customs both require a clearer definition of ‘knowledge’, or of ways of knowing of VAT fraud in a supply chain. Is it enough for Customs to argue it can withold VAT from traders simply because they should be aware carousel fraud exists?

Or should the burden of proof be on Customs to show traders have reasonable means to detect actual fraud in their own supply chains?

Although this new conjoined case of four traders is being heard this week in the Court of Appeal, a judgement won’t be released until March. And even then, if the judges decide to refer the case to the ECJ in order to get clarity on the law, it could be three years for any legislation to be set down.

Clarity should come but, for now, as for the past four years, it is a very costly waiting game.

And some good traders, crippled by Customs’ policy on the matter, will be unable to work, or contribute to the British economy.