Industry blow as Customs win precedent The case was brought by Bond House Systems Limited which was protesting disallowance of a VAT repayment for May 2002. Customs claimed the VAT claim was based on transactions not amounting to economic activity. Customs contended the goods were repeatedly traded within a group of companies without being sold to an end user Thus it was argued there was no true economic purpose to the transactions.
Customs further contended that the transactions formed part of a carousel or missing trader scam although Bond House Systems was not alleged to be a knowing participant.
Customs argued the repayment claim being made by the company was invalid as the sums it was reclaiming were not VAT.
The Tribunal accepted both the legal and evidential (Cont P2) issues and Customs won on 26 of the 27 evidential points and was awarded costs.
A Customs spokesperson said:
This decision confirms Customs entitlement to deny repayment claims where the transactions do not amount to economic activity.
The tribunal agreed that Customs was right to disallow the majority of a repayment claim where a chain of transactions had occurred which did not in reality involve taxable supplies.
This is a useful precedent for any future cases and in particular in cases involving computer chips and mobile telephones.
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