A distribution company has won a tax row with the Revenue Commissioners concerning a disputed €6.54m Vat bill.
This follows the Tax Appeals Commission (TAC) upholding the company’s appeal and finding that the €6.54m Vat assessment issued by Revenue to the unnamed firm for the years 2013 to 2018 be reduced to zero.
Revenue issued the assessment in 2019 after alleging that the firm had bought products from 12 so-called ‘missing traders’ and had sold to four further dealers in the EU, in circumstances where its counterparties had not properly accounted for Vat on the transactions, and that firm knew or should have known this.
Revenue determined that the company, which sells to wholesalers in Ireland, abroad and to retail customers, was liable for the foregone Vat.
Revenue stated that the company’s trade with the ‘missing traders’ made up €20m of the company’s purchases during the 2013 to 2018 period.
However, in his twin ruling after five days of evidence at the TAC, Appeals Commissioner Simon Noone has found that Revenue has failed to demonstrate that the firm knew or should have known that its transactions with the 12 ‘missing traders’ and four EU customers were connected with Vat fraud “and therefore the assessment should be reduced to zero”.
Mr Noone found that it cannot be said that the firm should have known that its dealings with the missing traders were “too good to be true”.
He said there was no clear evidence before him to show that the firm was aware of Vat fraud and noted that Revenue did not warn the company about the risks of such dealings prior to its decision to raise an assessment against it.
As part of an 86-page ruling, Mr Noone also found that Revenue breached the firm’s right to defence under EU law in the case and the assessment be also reduced to zero on this issue.
Mr Noone determined that Revenue explicitly refused to allow the firm to respond to allegations before the €6.54m Vat assessment was raised against it, and instead said that any such response could be provided in the context of an appeal to the TAC.
Mr Noone stated that the company was entitled to submit its observations on the allegations, and that Revenue was obliged to consider these observations before deciding whether or not to raise an assessment.
He stated that if the firm had not appealed the assessment, the bill would have been payable within 14 days.
He said that in the circumstances, it is difficult to understand the basis on which Revenue contends that the making of the assessment did not adversely affect the rights of the firm.
The firm told the TAC there was no evidence whatsoever of how it should have known that the sales of its product were connected to fraud.
The company also told the TAC that there was no evidence that all 12 of the ‘missing traders’ were in fact connected with each other.
The high-ranking Revenue officer in the case examined company sales and purchase invoices, stock records, financial statements, sales/purchase ledgers and 1,298 emails between the company and certain suppliers for the period 2013-2018.
The case is set to be referred to the High Court.
