Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

HMRC loses £2.4m VAT repayment appeal

by
29th Oct 2013
Save content
Have you found this content useful? Use the button above to save it to your profile.

HMRC’s application to appeal a £2.4m VAT refund to mobile phone trading companies Unistar Group and Unistar Trading has been rejected.

The companies won their appeal against the Revenue’s refusal to repay the VAT in Unistar Group Ltd & Unistar Trading Ltd v Revenue & Customs [2013] UKFTT 344 (TC) (19/02/2013) in January this year at a first tier tax tribunal at Manchester Crown Court.

The VAT was withheld due to extended verification by HMRC as they wished the companies to demonstrate they weren’t privy to missing trade intracommunity fraud (MTIC).

The companies had been trading in mobile phones in the UK and abroad in 2001 and managing director Ruarri Spurgeon upheld that he didn’t know that the transactions in which the companies were involved were connected with the fraud.

But HMRC put forward the case that due to the companies’ poor diligence, Spurgeon should have known about the transactions’ MTIC fraud connections.  

Judge David S Porter ruled earlier this year that neither company knew, nor ought to have known, that the transactions were part of an MTIC fraud.

In handing out his ruling, judge Porter said: “We have considered the facts and law and decided that HMRC has not proved on the balance of probabilities that trading and group, through Spurgeon, either knew nor ought to have known that the deals, subject of the appeals, were connected with the evasion of VAT and we will allow the appeals.”

Due to the ruling, Unistar Trading, which went into liquidation in 2009 will receive payments of £933,345 and Unistar Group will receive £1.5m in VAT repayments, both for work the company carried out in 2006.

The Revenue challenged this by applying for an appeal in March, but has since been rejected by the court.

A spokesperson for HMRC said that the refusal to appeal left them “naturally disappointed” as it had largely driven MTIC fraud out of the mobile phone sector, to the benefit of the legitimate fraud.

“We continue to successfully tackle other VAT fraud in the mobile phone sector through the courts winning over 100 tribunal decisions protecting over £300m for the UK,” the Revenue said.

Replies (8)

Please login or register to join the discussion.

avatar
By The Black Knight
30th Oct 2013 12:59

?

Did they actually get the criminals?

or was it just a case of taking out the innocent!

Thanks (0)
Replying to lordofsums:
avatar
By karen1909
30th Oct 2013 13:26

Easy option

The Black Knight wrote:

Did they actually get the criminals?

or was it just a case of taking out the innocent!

 

That sounds just like HMRC. They always go for the easy option

Thanks (0)
avatar
By 0109461
30th Oct 2013 14:15

Unistar

My firm were acting accountants for UGL & UTL. HMRC stance was a "blanket" stance issued by Red Dawn Primo. My clients have spent six years fighting HMRC over this matter. The effects on my client's business and lifestyle were severe.HMRC have no concept on the damage caused by their actions on this case. We are still waiting for an apology.

Thanks (1)
Replying to Madi:
avatar
By sallycox
30th Oct 2013 15:31

Apology?

Much as your clients deserve an unreserved apology, HMRC do not appear to be in the habit of apologising for anything. Good luck with that one.

Thanks (0)
avatar
By The Black Knight
30th Oct 2013 14:37

I do like that bit

"A spokesperson for HMRC said that the refusal to appeal left them “naturally disappointed” as it had largely driven MTIC fraud out of the mobile phone sector, to the benefit of the legitimate fraud."

 

to the benefit of the legitimate fraud!

Gives you some idea where HMRC are coming from and would certainly explain their behaviour if they were on the criminals payroll.

Thanks (0)
Replying to lionofludesch:
avatar
By 0109461
31st Oct 2013 08:48

HMRC VAT Fraud

HMRC were clueless. They still are. My client's were dealing direct with blue chip companies and acredited distributors. The vast majority of frauds occured (if actually occured at all) 8 or 9 suppliers down the supply chain. HMRC could not accept that my client was not involved in any carasal fraud. If client my was involved with criminals they would have been prosecuted accordingly. This case has been a waste of public money. HMRC costs on this case must be close to seven figures.

Thanks (0)
avatar
By oldshoremore
30th Oct 2013 15:21

an oxymoron, surely!

Can HMRC point in their manuals to the definition of 'legitimate fraud'. Is it like mercy killing or mothballs, perhaps?

Thanks (0)
avatar
By The Black Knight
30th Oct 2013 15:28

oxymoron? HMRC you mean!

poxy morons even

Thanks (0)