Quality Import Export Ltd v Revenue & Customs

VAT � MTIC fraud � whether trader entitled to recover input tax � whether assessed transaction formed part of transaction chain which was connected with VAT fraud � yes � whether trader knew or should have known assessed transaction was connected with VAT fraud � trader knew of connection � appeal dismissed

����������������������������������������������������������������������� JOHN ROBINSON

This is an appeal by the company Quality Import Export Limited (�the Appellant�) against a decision of The Commissioners of Her Majesty�s Revenue and Customs (�the Commissioners�) to disallow a claim made by the Appellant for the repayment of input value added tax in the sum of �89,250.� The Commissioners notified the Appellant of their decision by their letter to the Appellant dated 19 April 2007.

Despite the advocacy skills of Mr Hamid, it is our decision to dismiss the Appellant�s appeal.� The weight of the evidence is unquestionably against the Appellant, and it is our finding that the relevant transactions entered into by the Appellant on 30 June 2006 were connected with the fraudulent evasion of VAT; that the Appellant knew this to be the case; and that accordingly, having regard to the relevant case law, the Commissioners are entitled to refuse the Appellant�s claim for repayment of input tax in relation to the relevant transactions.

The fraud and transaction chain in the present case is known as a �simple� fraud chain (in contrast to the more complex �contra� fraud chain, with which we are not concerned).� The goods traded are of high value and small bulk, typically hi-tech goods, and frequently mobile telephones, as in the present case.� They can be traded easily and in large quantities at very high values, and physical delivery (as opposed to the goods being held by an intermediary to the order of a trader) is not necessarily taken by each of the traders in the chain.