18956
	
	VAT  — input tax — alleged carousel fraud — Commissioners unable to establish circulation of payment without tribunal inferring that certain payments had been made to particular party in chain of transactions — tribunal unwilling to make necessary inferences — appeal allowed without tribunal hearing any evidence.

MANCHESTER TRIBUNAL CENTRE

 
 	
	TOTEL DISTRIBUTION LIMITED	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	 J David Demack  (Chairman)
						 Jon P M Denny	

Sitting in public in Manchester on 10 February 2005

Mr Michael Patchett-Joyce, of counsel, for the Appellant 

Mr Andrew Macnab, of counsel, instructed by the Solicitor’s office for HM Customs and Excise

	© CROWN COPYRIGHT 2005

DECISION

1.	The Appellant company, Totel Distribution Limited (“Totel”), appeals against decisions of the Commissioners of Customs and Excise:
(a)	by letter of 8 December 2003 refusing to repay input tax of £257,600; and  
(b)	by letter of 26 February 2004 refusing to repay input tax of £271,687.50
2.	When the case was called on, Mr Macnab, counsel for the Commissioners explained that the Commissioners refusal to repay the input tax claimed was based on allegations of fraud, not necessarily by Totel, but by a party in a chain of transactions the Commissioners claimed to be what is known as a carousel fraud, and he accepted that the burden of proving fraud fell on them. He indicated that, as part of their case, he would be inviting us to infer from certain documents that specified payments had been made to a particular party in the chain of transactions.  Having carefully examined the documents in question, we indicated that we were not prepared to draw the necessary inferences from them.  Since without our drawing those inferences, the Commissioners were unable to establish their case on fraud, Mr Macnab accepted that the appeal must be allowed. 
3.	In those circumstances, the parties agreed that we must allow the appeal.  We do so without having heard any evidence.
4.	On the application of Mr Michael Patchett-Joyce, counsel for Totel, Mr Macnab accepted that the Commissioners should pay, and we direct that they do pay, Totel’s costs of, and incidental to, and consequent upon the appeal, such costs to be calculated on the standard basis.  

DAVID DEMACK
CHAIRMAN
Release Date: 24 February 2005

MAN/04/0028
££Totel Distribution Ltd v Customs and Excise [2005] UKVAT V18956 (24 February 2005)