A One Distribution (UK) Ltd v Revenue & Customs

Value Added Tax� -� MTIC appeal involving four transactions in relation to which input tax was disputed, undertaken by a company with a substantial bona fide business in related spheres� -� whether the Appellant knew that its transactions were connected to MTIC fraud -- whether the terms of the transactions were inconsistent with anything but MTIC fraud� -whether the due diligence was adequate and what would have been ascertained if reasonable further enquiries had been made� -� Appeal Dismissed

Sitting in public at 45 Bedford Square, London WC1 on 4-7, and 10-12 May and 21 July 2010

This was an appeal in a case in which the Respondents had made assessments on the Appellant for just in excess of �300,000 because they contended that four deals undertaken in the Appellant�s 3-month VAT period ending 08/06, had been tainted by MTIC fraud. It was not in dispute that the Appellant had traded honestly for many years and that its basic business was one of importing computer casings and other computer components, holding them in its substantial warehouse, and then supplying them to numerous customers in the UK.

The Appellant did four back-to-back deals in its VAT period 08/06. The first was a purchase of 2520 AMD64 CPUs from Plazadome Ltd (�Plazadome�) and the sale of those CPUs to the Dutch company, Zaanstrait BV (�Zaanstrait�) effected in a slightly muddled way between 19 and 25 July 2006. Deals 2,3 and 4 were all purchases from Culmain Limited (�Culmain�), and sales to the Austrian company, ASAP Trading GmbH (�ASAP�).� Deal 2, effected on 1 August, involved 4000 4bit iPods, Deal 3 (on 3 August) 4000 semi-conductors and Deal 4 (on 8 August) 3760 semi-conductors.

These transactions resulted in actual requests for repayment of VAT and for that or other reasons were chosen for �extended verification� by HMRC.