TriCell LTD (fka TCLL)

[bonedaddy77]

This goes with my previous post. It explains the reason that they couldn't pay Vale and how the company was hammered financially due to VAT taxes.

TRICELL PLEDGES TO TAKE COMPENSATION ACTION
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DAVID ELKS

09:30 - 14 January 2006
Mobile phone traders are considering launching legal action against the Government after a Customs crackdown on VAT fraud was ruled unlawful. Stoke-based Tricell confirmed it is to pursue compensation after the European Court of Justice (ECJ) ruled Customs illegally withheld VAT from innocent traders because transactions were linked to so-called "carousel fraud."

The mobile phone distributor was forced to cut jobs and temporarily suspend trading after almost £1 million in VAT was withheld from the firm in 2003.

Dozens of other phone exporters across North Staffordshire might also be able make claims against the Customs' campaign to crack down on a fraud which annually costs the economy £2 billion.

Industry analysts predict the ECJ decision could cost the Government up £5 billion to compensate around 400 companies wrongfully penalised, although the Government suggests the bill is likely to be closer to £100 million.

Andre Salt, chairman and chief executive of Tricell said: "Tricell can now buy goods in the open market without fear of having VAT refunds withheld by Customs.

"Tricell will now pursue damages for lost profits, attorneys' fees expended and other damages."

The ECJ's judgment followed a battle to decide the legality of a tactic introduced in 2002 by Customs - now HM Revenue and Customs (HMRC).

The case before the ECJ involved three companies - Bond House Systems, Optigen and Fulcrum Electronics - who successfully argued the system of blocking VAT rebates because they were involved in a carousel was illegal.

Tricell was a high-profile casualty of the crackdown.

The company saw sales treble in the two years to 2002 with turnover reaching £381.3 million.

However, Customs initially withheld £9.8 million in VAT as a result of the new regime, although this was reduced to £1 million.

The retention of VAT refunds hammered the company's cashflow position and sales in 2003 fell to £54 million.

In 2004, the strictures led the firm into a high-profile dispute with Port Vale because the pressures on cash prevented the firm from handing over £92,000 as part of its sponsorship.

John Sumnall, director of Tricell, said: "Tricell found itself in a position where VAT payments were withheld by Customs, yet the company was never accused of any wrongdoing. That affected Tricell's ability to trade with creditors - including Port Vale not being paid and jobs being lost. "

VAT experts across North Staffordshire said other companies were weighing up options for legal action.

After all, North Staffordshire was once dubbed the capital of mobile phone trading, although it is estimated 90 per cent of traders ceased trading or went dormant after the crackdown.

James White, tax partner at the Hanley office of professional services firm Baker Tilly, said: "Clearly this is a defeat for Customs which says that you can't go riding in with a coach and horses over innocent traders."

National Audit Office figures show 400 companies are affected with around £1.25 billion in VAT payments withheld.

Anthony Elliot-Squire, chairman of the Federation of Technological Industries in Birmingham, estimated the Treasury could be forced to stump up £5 billion.

Jason Collins, tax litigation partner in London law firm McGrigors, which has been representing a number of affected businesses, said companies were already lodging claims with the possibility of a class-type action on behalf of larger numbers.

The Government said the HMRC would now consider the detail of the ruling to determine its impact on previous decisions.

Meanwhile, mobile phone entrepreneur Peter Carnall has called for better banking support for traders as a result of the ECJ decision.

His telecoms group Eurostar was forced to seek new banking arrangements in October last year after the Bank of Scotland gave 30-days' notice that accounts were being closed.

Mr Carnall has since managed to find new banking facilities.

He said: "It is the fastest growing sector on the globe.

"Based on this fact banks should be supporting companies, not discriminating against them on the basis of the sector."

source:
http://www.thisisthesentinel.co.uk/displayNode.jsp?nodeId=158338&command=displayContent&sour...