Autumn 2006 Newsletter Contents Into The Unknown Season Of Goodwill Farewell Andre Toon Done Doon Day Of Reckoning Artistic Licence Gizmos Again A Free Lunch Sweet As Nectar Security Concerns Going For A Spin The Cap Does Not Fit While It's Hot? Code Cracking Bad Connection Broken Trusts You Can't Take It With You Dividend Returns IR35 RIP? Spam Spam Spam Breaking Up Duty Calls Time Shift Moving Vans

Going For A Spin Customs still have problems with "carousel" fraud. This involves a dodgy dealer selling goods - usually mobile phones or computer chips - to an honest but gullible person. Mr Honest claims VAT back on the purchase, but Mr Dodgy never pays it to Customs - he is long gone with the cash. Sometimes the goods get recycled several times with different people claiming VAT and different people disappearing - hence "carousel". Customs believed that they could deny Honest his VAT by showing that there was a fraud - it wasn't proper business activity, so VAT couldn't be claimed. In the Bond House case, the European Court said that it would still be business for Honest if there really were goods involved in the transaction - Customs could only deny VAT to someone who knew, or ought to have known, that there was a fraud going on. That's much harder for Customs to prove, and it seemed they would have to pay out all the Honests whose claims they had refused while waiting for the Bond House decision. Customs have not given up. They have paid some people, but they have taken the harder argument with others and tried to show that they were not Honest at all. One recent case involved a consignment of video projectors. The claimant regularly dealt in mobile phones and knew how careful he had to be to avoid carousel fraudsters, but he must have taken his eye off the ball when someone asked him to arrange a different transaction. Customs didn't say he was dishonest, but they could show that the sale wasn't real - that number of video projectors wouldn't fit into the van that was recorded as transporting them. So the invoice didn't properly describe the goods, and it couldn't be used to back up a VAT claim. It's important to avoid the problems of carousel fraud. If you deal in mobile phones or computer chips - or, increasingly, anything else - you need to be concerned about the good faith of the people you are dealing with. Customs will be keen to argue that you have been conned and it is your problem, not theirs. If you are worried about a deal, we will be happy to advise you on what you should do to protect yourself.