The Channel logo

News

By | Team Register 12th January 2006 13:30

Europe victory over frozen VAT

ECJ rules on Bond House case

Companies unwittingly ensnared in VAT fraud schemes can reclaim frozen VAT refunds thanks to a judgement by the European Court of Justice.

The court today issued its judgement on Bond House Systems’ appeal, along with two other firms, against HM Revenue & Customs' rulings, under which their VAT rebates were frozen when they became unwitting victims of carousel frauds.

In such frauds, scammers import VAT-free goods from another EC country, sell them on with VAT added and then disappear before paying Customs the VAT. In some schemes – dubbed carousel frauds – goods are circulated repeatedly round a number of scammers

The court ruled that a company's deduction of VAT, “cannot be affected by the fact that in the chain of supply of which those transactions form part, without that taxable person knowing or having any means of knowing, another prior or subsequent transaction is vitiated by VAT fraud.”

Bond House was effectively forced to cease trading after losing a 2003 appeal against a tribunal decision on HMRC’s decision to withheld £13m of rebates. Many other companies – many in electronics distribution – were hit by such frauds, with customs withholding £210m in rebates in 2003-2004 alone.®

alert Send corrections

Opinion

Woman cuddles 'sly-looking' Fennec fox. Photo by Shutterstock
Cartoon of employee asking wky boss makes hium wear suspenders (while pincer through open trapdoor remains poised above his head) illustration by Cartoon resource for Shutterstock

Frank Jennings

It's not like my boss painstakingly nurtured the contacts, right?

Features

Girl and computer, photo via Shutterstock
Middle-class terror of engineering also part of problem
Nerd fail photo via Shutterstock
Shouting match
Single market vs. rest of the world