1/24/2008 10:50:00 AM
Distributor nightmare is over following VAT tribunal
Distributors may finally have escaped the ‘nightmare’ of withheld VAT payments, following a VAT tribunal’s decision to return over £2m to a UK trader last week.
Essam Bishara (pictured, above) of e-marketplace mobile wholesaler GSM Exchange, hailed the outcome as a turning point. He said: ‘This nightmare is over. Companies will be able to export in and out of the UK, and continue international trade. For distributors it is very positive. This market is very important for competition and keeping the price of handsets reasonable in the UK.
‘The UK has lost out because of the actions of HMRC; businesses and companies have lost out because they have not been able to operate, and consumers have lost out because there has been no added competition.’
Livewire Telecom will have £2.14m returned to it after the tribunal overturned HM Revenue and Customs’ (HMRC) decision not to repay its tax. The ruling could pave the way for funds to be returned to disties in a similar predicament.
Since a European Court of Justice ruling in 2006, HMRC has been able to deny VAT repayment to any company which it thinks ‘knew or should have known’ that a VAT fraud had occurred in any of its supply chains. Its policy of ‘extended verification’ has led to many claims remaining unsettled since 2006.
Martin O’Neill of Vantis, Livewire Telecom's business adviser, said: ‘This is the first case of its type to be won in the VAT Tribunal. It will assist companies contesting similar cases in future because it successfully overturned a number of unreasonable assumptions about the mobile phone industry which have become the basis of HMRC’s policy in this market.’
A spokesman for HMRC said that no decision about appealing against the tribunal’s decision had been made.