HMRC loses £1m VAT carousel fraud case

A MOBILE PHONE and components trader has scored a historic victory against HM Revenue and Customs by recovering a seven-figure VAT sum.

Express Computers/Hillcraft Trading has finally been paid back the £1m VAT which was withheld in 2006 under HMRC’s Extended Verification policy – the government’s main weapon against alleged VAT carousel fraud, our sister publication CRN has reported.

The firm, which went out of business as a result, was selling a mix of mobile phones, computer components and iPods, all of which the trader believed were from legitimate sources.

With guidance from litigation specialist CTM, the trader successfully won its “means of knowledge” tribunal appeal by systematically proving that evidence given by HMRC officers at the time was unreliable.

A newsletter sent out by CTM read: “The director of the company was, as a result, cleared of any dishonesty and every allegation made against him was proved to be untrue.”

Speaking to CRN, Liban Ahmed, a former HMRC officer and now director of CTM, said: “This was a fair decision, but it was because of the fact that we left no stone unturned and also the director of the company played an active role.

“It will give other traders hope that they can win and there is light at the end of the tunnel, but it is a very long road.”

Dave Fisher, managing director of Silicon8, which is also waiting for a significant VAT repayment, said the case raises “serious questions” about the conduct of HMRC staff.

“I think serious questions must be asked of HMRC’s chairman as to why it is that HMRC officers are deliberately being dishonest, failing to disclose relevant information to the tribunal and appear to be complicit in an overall attack against traders in our market, including deliberately delaying, disrupting and destroying people’s livelihoods,” he said.

“Is there an edict from above or is there some kind of financial gain to be made in the systematic fabrications being made against innocent traders within our market segment?,” he added.


Related reading