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Victory "of sorts" on joint and several
Both HM Revenue & Customs and mobile phone traders claimed a victory following the European Court of Justice ruling on joint and several liability last week.
The court upheld the principle of joint and several liability but added a series of caveats to the legislation. Dass Solicitors which represents the claimants said this represented a victory of sorts for traders.
The court ruled that presumption of fraud was not valid on the grounds that a trader sells goods on for less than they had purchased them for. "That presumption is rebuttable on the proof that the low price payable for the goods was attributable to circumstances unconnected with failure to pay VAT" said the court.
It added that if a trader takes every reasonable precaution against fraud then he cannot be jointly and severally liable. The court ruled: "Traders who take every precaution must be able to rely on the legality of those transactions without the risk of being made jointly and severally liable to pay the VAT due from another taxable person."
The court also threw out the securities provision that enabled Customs to hold security from traders for VAT elsewhere in the supply chain.
Dass Solicitors partner Alias Dass said: "It has gone better than expected. The claimants were justified in taking the case to the court."
A Customs spokesman said: "The Government welcomes the ECJ´s firm and final confirmation that member states may legally prevent abuse of the VAT system and protect revenues by applying joint and several liability.
The claimants´ solicitors fees for the case amount to more than £200000.