April 2003

There is a rumour that Customs are looking at basing some of the VAT control programme on visiting businesses who have had a qualified audit. If you have clients who receive such a visit please let us know.

It looks as though VAT on postal services provided by Royal Mail is not far away, it has been reported that the EC Commission will propose that each Member State introduces VAT at a reduced rate between 5-10%.

If an Appeal to Tribunal is lodged, there are various deadlines that have to be met throughout the period of the Appeal. In a recent case, Customs had refused to pay a businesses claim for overpaid VAT. The business appealed. Customs asked the Tribunal to extend the time in which they had to serve their statement of case. The Tribunal granted this extension but a further request by Customs for another extension was denied. Customs served their statement of case over a month too late and the business therefore asked for their Appeal to be allowed because of this missed deadline. The Tribunal allowed the businesses Appeal stating "there were no compelling reasons why non-compliance should be excused".

Customs have won the very important case of "Bond House Systems" which dealt with whether business transactions entered into by the Appellant amounted to economic activity, and therefore were deductible for input tax purposes. Customs won on all points of law and also won 26 of the 27 evidential points. In addition to this Customs were also awarded costs. This is a major win for Customs in their fight against this type of fraud and a very useful precedent for them for future cases.