|
News Index
Next
Previous
The high court has taken the first step in allowing solicitors DLA Piper to
launch a joint action on behalf of up to 150 companies hoping to claim damages
from HMRC about withholding VAT repayments to them.
The case is related to "carousel fraud" and could last years.
HMRC has been struggling to stem losses from fraudulent claims for VAT
repayments that run into billions, but its attempts to clamp down on the fraud
have also involved innocent traders of items such as mobile phones and computer
chips who are now seeking recompense for their losses rather than the VAT
itself.
Sir Igor Judge, President of the court's Queen's Bench Division, is likely to
approve the provisional ruling within weeks.
DLA Piper's senior partner Simon Airey commented: "This is the opening shot of
what may become a very substantial litigation. The grant of a Joint Litigation
Order will allow a large number of companies to pursue claims for damages.
"However, a cut-off date for joining the litigation is likely to be included in
the order so companies who have had VAT withheld and believe that they have
suffered loss as a result should take legal advice without delay.
"Unscrupulous traders should not treat this as a crock of gold at the end of the
rainbow."
HMRC had already agreed to the order because it felt that would be easier than
dealing with many individual claims.
An HMRC spokesperson said it had not acted unreasonably and would contest any
claims for damages and/or compensation.
Over the past few years the HMRC has made various attempts to tackle the issue,
including refusing to refund VAT where it suspected fraud. But the carousels
often contain innocent traders.
In January Europe's highest court ruled that companies were entitled to reclaim
VAT wrongly held on to by the authorities, opening the door to a number of legal
claims against the government since some companies were forced to stop trading
as a result of the HMRC's actions.
HMRC had ruled in 2002 that the three companies' sales and purchases did not
constitute "economic activity" for the purposes of VAT, but the European court
of justice rejected that argument.
Although the companies were found to be blameless they have since ceased
trading.
Source:
Credit
Control Journal
|
