EZY SOLUTIONS LTD & Anor v Revenue & Customs (PROCEDURE - MUCs - significant volume of evidence - application by HMRC for a direction to use sampling method - whether evidence served on Appellants should be limited)

PROCEDURE - MUCs - significant volume of evidence - application by HMRC for a direction to use sampling method - whether evidence served on Appellants should be limited

For the Respondents: �� Ms J. Goldring of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs

             These joined appeals concern VAT assessments, denials of the right to deduct under Kittel and section 69C penalties.

             In brief, Ezy Solutions Ltd ("ESL") and Milo Corporation Ltd ("Milo") were payroll and labour providers supplying temporary workers to recruitment agencies. ESL was also a main customer of Milo. The workers were employees of mini umbrella companies ("MUCs"). ESL performed the payroll on behalf of the recruitment agencies and its associated business Ezy Payment Solutions Ltd paid the workers and the VAT liabilities of the MUCs.

             HMRC contend that a supply chain of such length was not commercially feasible and the VAT MUCs which supplied Milo fraudulently defaulted on their VAT obligations, principally by abusing the VAT Flat Rate Scheme ("FRS") by claiming to trade in the wholesaling/printing/associations trade classification and accounting for VAT at a rate of (in most cases) 8 - 8.5% which they were not entitled to, and by failing to pay VAT charged by them and due from them.