Tax & Accounting News

HMRC loses VAT fraud case

28/01/2008

A VAT tribunal has ruled that HMRC wrongly withheld a VAT repayment from a trader (Livewire Telecom Ltd) it suspected of being involved in a carousel fraud.

HMRC accepted that Livewire's direct supply chain was not fraudulent, but Livewire had traded with two companies that HMRC believed were part of a fraudulent supply chain. HMRC therefore argued that Livewire knew or should have known about the fraud.

The tribunal found that the two companies did not know of the fraud and were not involved in it, therefore Livewire neither knew nor ought to have known about the fraud. HMRC must now refund the VAT owing to Livewire.

This is good news for other companies in a similar situation, but each case depends on its own facts.

 

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