“As you know, we have submitted our Notice of Appeal to the VAT Tribunals and expect to have our claims upheld. Further, I understand that, following a judgement in the Royal Courts of Justice on the 18 th February 2004, that leave has been given for the Federation of Technological Industries to appeal to the European Court to ascertain whether the Joint and Several Liabilities imposed by HM Customs and Excise has any legal standing. I am further led to believe that the judge commented, ‘ I consider that the construction by Maitre Waelbroek (instructed by claimant) has not merely a substantial prospect of success but indeed is likely to succeed’ . This fact, along with the fact that we believe we make adequate supplier and customer checks, lead me to believe that you should be immediately making these outstanding payments to us and that you had no legal right to withhold these monies in the first instance.”
“Subsequent to the repayment of the full loan amount, [VLSI] shall be entitled to maintain an ongoing investment with [the Appellant]. Therefore [VLSI] shall continue to be entitled to a return on investment equal to 25% of the gross margin achieved by [the Appellant], during the normal course of his [ sic ] business.”
“discussed the prevalence or lack thereof of MTIC fraud with every single person that I met within the trade, and I got the same response. I discussed it with our professional advisers, Burges Salmon, with our accountants and everyone else; and in my opinion, what I had heard, joint and several liability had effectively reduced that to nil. I cannot find any evidence of it [MTIC fraud] ... I spoke to the freight forwarders, literally everyone I spoke to, so I couldn’t find any evidence of it. “I also couldn’t see any cases coming to the fore of – recent cases. So by that I mean a case coming in early 2005 for goods that had been traded in – late 2004. What I was seeing coming to the fore were cases being brought to court, to trial for – or arrest for frauds that were committed in 2002 and 2001. So it was my understanding at the time that joint and several liability, as I have said, had effectively – to say it had wiped it out completely is not true, but it had reduced it to levels that he considered it was safe to put his toe back in the water (to adopt language put to him by Mr. Draycott, with which he agreed ‘absolutely’). “The lone voice was where I would go and see Customs on a monthly basis or ring them, I would speak to Laurence Smith and he would say something to the contrary, but he would never give any details of whether it is recent – in fact his comment was, well, we are still employed, or we are still here ...”
‘Although the Commissioners may validate VAT registration details, it does not serve to guarantee the status of suppliers and purchasers. Nor does it absolve traders from undertaking their own enquiries in relation to proposed transactions. It has always remained a trader’s own commercial decision whether to participate in transactions or not and transactions may still fall to be verified for VAT purposes.’
‘No, because they are buying from a UK supplier’
‘How could the Appellant have known of any fraud before it happened?’
“The civil standard of proof always means more likely than not. The only higher degree of probability required by the law is the criminal standard. But, as Lord Nicholls of Birkenhead explained in In re H (Minors) (Sexual Abuse: Standard of Proof)[1996] AC 563 , 586, some things are inherently more likely than others. It would need more cogent evidence to satisfy one that the creature seen walking in Regent’s Park was more likely than not to have been a lioness than to be satisfied to the same standard of probability that it was an Alsatian. On this basis, cogent evidence is generally required to satisfy a civil tribunal that a person has been fraudulent or behaved in some other reprehensible manner. But the question is always whether the tribunal thinks it more probable than not.”
“The taxable person does not owe a “duty” to take precautions (unless it is a duty to himself). The taking of all reasonable precautions (and acting on the basis of what he discovers as a result of taking those precautions) provides him with an impenetrable shield against any attack by HMRC.”
“Are normal commercial arrangements in place for the financing of the goods?”
“In the light of the difficulties of making enquiries beyond the immediate supplier, there is a danger in reading paragraph 51 of Kittel in a narrow sense and as suggesting that provided proper checks are carried out by the trader on a supplier, then the trader’s claims to repayment of VAT are not capable of challenge. That is not, in my judgment, a correct view. Suspicious indications obtained by a trader from carrying out due diligence checks on its supplier are one, but not the only basis from which it may properly be inferred that a trader knew or should have known of its implication in VAT fraud. The test to be applied is that set out in paragraph 61 of the Judgment [1] , and indeed in the Court’s final determination at the end of the judgment. Paragraph 51 needs to be understood in the sense that “all reasonable precautions” may, in some cases, involve ceasing to trade in specific goods in a particular market, at least in the particular manner in which the trader undertakes that trade. Such a situation may conceivable arise where, from other indications available to the trader, the trader knew or should have known that it is more likely than not that, despite all due diligence checking, any further goods traded in the same way will be implicated in VAT fraud.”