EARLY SUCCESS FOR TRADER IN 2012 GIVES SOME HOPE TO OTHERS

Tribunal gets it just right

January 2012 saw a trader successfully win a means of knowledge appeal in Tribunal, with the Judge appearing to recognise that it should be difficult for HMRC to win such cases. This follows on from CTM’s back to back successes for 3 traders in 2011; 3 as a result of the conclusion of length trials and a fourth where HMRC repaid 50% of a repayment claim, even though fraud was identified in its supply chain.

Within the 2012 Judgment, it made it absolutely clear that a trader must know that it is fraud, not that it might be fraud. The Court of Appeal in Mobilx previously made this clear and set the bar very high for HMRC. Even if a trader was almost certain that it was fraud, this is not sufficient for HMRC to succeed, as an unknown level of risk infringes the principals of legal certainty. We would add, though, that the standard of persuasive arguments is critical in these cases. In other words, get the right Counsel, or representative, to argue your case and challenge every point in detail, even if you do not think HMRC’s point is relevant. You will also know the name of the Judge months ahead of a trial and you should read their decisions to see what your Judge likes and doesn’t like. Preparation is vital.

Recent Arrests

A number of arrests have been made recently in relation to trading that took place in 2006. We are representing such traders and are keeping a close eye on developments. The evidence does not seem to be any more than is being put before Tribunals in civil cases, but FCIB evidence is being used to prove money laundering offences. Challenging criminal cases is no different to challenging civil cases and CTM is currently assisting criminal law firms in this area.

UK-UK Traders

HMRC have recently changed their policy on “means of knowledge” cases. They are now denying input tax on UK-UK traders and raising large assessments, irrespective of whether the company has the ability to pay. In other words, if you are currently trading, and fraud is found in your supply chain, an assessment is quite likely.

EU authorities are also now using powers to zero rate exports if the customer in another member state goes missing and does not account for the output tax. HMRC tactics are changing and all traders need to make extra effort to do all they can to avoid trading in fraudulent chains.


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