HM Revenue & Customs (HMRC) has won a court victory against VAT ‘carousel’ fraud.
HM Revenue & Customs (HMRC) has won a court victory against VAT ‘carousel’ fraud. Mr Justice Burton in R (Just Fabulous (UK) Ltd) v HM Revenue & Customs held that Just Fabulous could not reclaim £19.5m VAT relating to its purchase of mobile phones from four suppliers.
The case concerns a type of carousel fraud—the repeated importing and exporting of goods from EU countries, with the VAT being reclaimed each time— known as contra or offset trading where carousels across several borders are linked, making it more difficult for the authorities to track them down.
Just Fabulous and two other firms, Evolution Export Trading and Brayfal, claimed they could not have been expected to know a fraud was taking place in a trade chain different from theirs.
HMRC successfully argued that the European Court of Justice case, Axel Kittel v Belgian State: C-439/04, applied to offset trading, meaning it was entitled to deny repayment to firms that knew, or should have known, that some fraud was
