Speakers Corner: The refining of VAT fraud law

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Even those not directly involved in the grey market in mobile phones cannot fail to be aware of the harshly punitive policies of extended verification, denial of VAT repayments and general market disruption which HM Revenue and Customs (HMRC) has levelled against hundreds of traders.

These policies have, since the early months of 2006, been applied across the board, and have unfairly punished many businesses.

Inevitably, there has been a flood of litigation in the VAT Tribunals, the High Court, the Court of Appeal and the European Court of Justice, and several test cases have now been decided. As a result, the legal landscape surrounding missing trader intra-community (MTIC) VAT fraud is now becoming more clearly defined.

The Court of Appeal will shortly hear submissions on three large MTIC fraud cases, and we anticipate that the Court’s judgement, when it is released, will further refine and clarify the way in which the laws on fraud, means of knowledge of fraud and culpability are to be applied to such cases. The decision of the VAT Tribunal is also eagerly awaited in a case in which Vantis was instructed – that of Olympia Technology. This case was referred, in part, back to the Tribunal from the High Court in order that certain transactions should be reconsidered.

Given that MTIC VAT cases of this type generally relate to transactions which may have taken place as long ago as early 2006, it is perhaps surprising that there remains some companies which have not yet even received a decision from HMRC as to whether or not they will receive their VAT repayments.

In many such cases, the traders may have been advised to hang fire in anticipation of a favourable judgement in the one case which will trigger an opening of the floodgates and lead to a massive climb-down by HMRC, swiftly followed by the immediate repayment of hundreds of millions of pounds in withheld VAT.

Full article in Mobile News issue 457 (February 15, 2010).

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