HM Revenue and Customs insisted today that it would press on with its attempts to crack down on VAT fraud after a judge’s withering criticism of its handling of one prosecution.

Five Manchester-based businessmen accused of a £120m VAT fraud centring on imported mobile phones were freed last month, after Mr Justice Crane stayed the prosecution for abuse of process. Defense lawyers had accused the prosecution of withholding evidence, thus depriving the defendants of the right to a fair trial.

It would not have been fair to try the defendents, Mr Justice Crane said.

It is thought that Mr Justice Crane's decision could have implications for around 18 similar cases.

In a statement, HM Customs and Revenue said it would carefully consider the ruling and ensure any lessons for the future were learned and swifty acted upon.

The agency said it would continue to tackle fraud, "with all the tools at our disposal" and insisted its actions already had "a major impact on the non-economic cross-border trade in mobile phones and computer chips and reduced significantly the tax losses to the exchequer."

HMCR said that such cases were extremely complex and resulted in huge numbers of documents. It said that while it was fully aware of the need to ensure the defence had all the relevant documents at the relevant time, "it is not always immediately apparent or clear what documents fall as 'relevant'."

More details in The Independent and on Bloomberg. ®

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