FTI Claims VAT Policy Is Incompatible With European Law

by Robin Pilgrim, LawAndTax-News.com, London

03 August 2004

Measures put in place by the UK Customs and Excise Department to make all companies in a purchasing chain jointly and severally liable for VAT payment defaults by fraudsters are to face scrutiny at the European Court of Justice, it emerged last week.

The Federation of Technological Industries (FTI) has claimed that the crackdown on missing trader or 'carousel' frauds is incompatible with European law. Despite expressing the view that in his opinion the measures employed by the Department were fair, Mr Justice Lightman ruled on Friday that the case should go before the European courts.

"It is with real misgiving that I conclude we must refer to the Court of Justice," he explained, continuing:

"Dishonest trade in these goods must be stamped out. I encourage the Commissioners to apply the impugned law in expectation of eventual victory in Luxembourg."

Customs responded by announcing that:

"We welcome the Court of Appeal's support of our actions to tackle this most serious and organised VAT fraud, which costs the UK taxpayer and robs our public services of more than £1bn a year. The court has stated that we should continue to apply these laws and we will do so proportionately and appropriately to stamp down on this systematic attack on the VAT system."

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