The judgment means that HM
Revenue & Customs may have to disclose more information to its
opposition in VAT tribunals, even if it is to the detriment of the taxman’s
VAT Tribunal chairman Colin Bishopp, in the case of Calltell v HMRC, found
that even in complex carousel fraud cases, where the taxman usually has to
contend with masses of information, it should still disclose documents relevant
to its case.
Calltell had previously failed in its bid to claim several million pounds in
input tax, as the commissioners had previously said that the company was aware
that carousel fraud was, or was likely, to be committed.
The appeal also failed, but Bishopp said it was ‘not sufficient’ for the
taxman to produce the bare minimum of information for appellants.
He called on HMRC to list the documents upon which they will rely on. ‘The
documents so disclosed should encompass most of those which are likely to be of
relevance,’ said Bishopp.The judgment follows the recent O’Connor Report, which
found that HMRC had begun to improve in its document disclosure regime for
‘They would hold information [back], particularly when they had given advice
to a business one year, and then different advice the next,’ says Andy Lynch,
senior consultant at tax firm Chiltern.
‘Since Calltell it seems that there is a marked improvement in the amount of
material that HMRC is disclosing.’ Lynch believes it ‘remains to be seen’
whether HMRC could disclose even more information.
He also warns advisers to think carefully about calling on the taxman to make
substantial disclosures. ‘Be careful what you ask for, it might not be in the
client’s favour.’ If HMRC fails to disclose what is requested, then Lynch says
advisers should make it clear to the tribunal.
Nevertheless, advisers believe the changes will see a major shift in tribunal
They argue that Bishopp has in effect suggested that HMRC should provide
appellants information maintained by civil investigators.
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