Mobile handset distributor European Telecom wins VAT and Duties Tribunal case against HMRC over £8.8 million in witheld VAT repayments and HMRC ordered to repay VAT plus costs and interest.
European Telecom went into administration in May 2007, owing around £8 million to creditors but owed £8.8 million in withheld VAT repayments from HMRC for suspected involvement in a VAT carousel fraud. The disallowed VAT was on 33 purchases totalling £50.2 million from Unique Distribution, another defunct UK distributor, which was at the time official UK supplier for Nokia.
The Tribunal judgement this month noted European Telecom was an established trader with more than 100 staff selling to the UK and overseas markets. It also noted European Telecom did not use the First Curucao International Bank, which has been central to HMRC’s investigation as a conduit for fraudulent VAT funds.
It said: “Customs has not satisfied the Tribunal the only reasonable explanation for Global’s purchases from Unique were that they were connected with fraud. Nor viewing the evidence has Customs satisfied us that it knew transactions were connected with fraud. The appeal is allowed with costs.”