Traders Online Advice:

Here you can ask CTM questions in relation to any Customs or Tribunal matter, or simply share information to assist others.

Submit your question/comment to a specialist advisor

This is a new service, but please see below for the most frequently asked questions, so far. If you feel that you need more information on a particular subject, please call a CTM advisor on 0870 405 7695

Questions:

Q: How much will it cost to appeal to Tribunal after my VAT has been disallowed for "means of knowledge".
A: Due to the many days required in court, for most it will cost up to £25,000. For traders with very few transactions, it could be less expensive, but it's very difficult to give an exact figure. Charges also vary greatly from one company to the next, depending on the advisors/barristers hourly rate.

Q: What if I can't afford to appeal to Tribunal?
A: A few companies will be in this position and there's very little that can be done. However, remember that it costs nothing to appeal yourself. Some traders are in desperate difficulties and are having to re-mortgage their properties to fund appeals. For further advice, please visit the official Tribunal website Here

Q: Will anyone assist with a 'no win no fee' arrangement?
A: Unfortunately, we do not know of any company or barrister who will do this.

Q: Who will actually represent us in the Tribunal?
A: We advise that you are represented by a barrister at Tribunal, and your advisors will provide valuable support throughout.

Q: Do I need a solicitor?
A: No, but there are firms of solicitors that have the experience and knowledge of Customs procedures to handle such cases.

Q: Will I have to give evidence in Tribunal and what will I be asked?
A: This is possible and you could be asked anything relating to your trading activity and your due diligence.

Q: If all my suppliers still exist and have paid their VAT, surely Customs must pay my VAT back.
A: It is always better if you have purchased from established companies who have paid their VAT. However, if there is fraud anywhere in your supply chain, you will be judged on what commercial checks you conducted on your immediate supplier, customer, freight forwarder and stock, plus many other factors. Please contact CTM or your advisor for full details of what commercial checks should be in place before trading commences.

Q: If there is no tax loss, will I receive my repayment?
A: Please read our Newsletters on the subject of contra trading. As far as a decision from Customs is concerned, the answer is no; they will treat virtually all supply chains as if they were contaminated with fraud.

Q: If it will cost me £25,000 to appeal to the Tribunal, how much will I have to pay in advance and how much will it cost me during the different stages.?
A: You will have to keep your account in credit, but this can be paid in stages over several months. The initial appeal and review stage may cost £3,000-£6,000 and most advisors/solicitors will want this paid in advance. There will be other smaller payments to be made, in respect of tribunal preparation work, but with several weeks in between. The bulk of the cost, the Tribunal itself (£10,000-£15,000), will be several months later and should not need to be paid for until just before the hearing.

Q: If I am still trading and pay VAT to Customs every quarter, what action can be taken against my company?
A: If you are purchasing in the UK, Customs may still disallow your Input Tax and raise an assessment against you for the full amount of VAT on your purchases, under the same 'Means of knowledge' powers. We also believe that Joint and Several ("J&S") liability powers will begin to be used. Please note the additional commodities now covered by the J&S powers, as shown in our VAT news section. In order to avoid fraudulent supply chains, we advise that you undertake the same high level of due diligence irrespective of whether you are a repayment trader or not.

Q: If my due diligence is very good and I have only traded with large experienced companies, is my VAT still at risk.
A: Yes; if Customs believe that you have traded in a way that shows that you knew that fraud existed in your supply chains, or ignored indicators that fraud existed, you may have your VAT disallowed. A simple example could be that you purchased goods significantly below market value, and you can see other examples in our Newsletters.

Q: Will Customs refuse my VAT simply because there is fraud in all supply chains?
A: This is yet to be seen, but we don't believe so. Customs will, however, make every effort to refuse VAT, but, where it is clear that you did everything you could to avoid fraud, and your trading procedures were sound, you should receive full repayment.

Q: What do you believe is an adequate level of due diligence?
A: Every situation is unique and you should speak to an independent advisor on this matter. This is one area that we recommend face to face advice. You should also be aware of the advice given by Customs in Public Notice 726. Pay particular attention to section 8.1 and click here to view the whole document.

Q: How can I help speed up the Tribunal process?
A:By

• Creating a schedule of all transactions; details to include, supplier/customer/freight forwarder name, invoice numbers, goods, quantity, values, VAT amount, percentage profit and any other relevant information.
• Create individual lists of all documents within each due diligence file.
• Create a list, in date order, of all the times you met with any supplier, customer and freight forwarder. Make notes of what you knew of each company/director and what you understood their knowledge and experience to be.
• Look at all the reasons given for refusals (see our previous newsletters) and consider how this could affect you and how you would respond.
• Be organised and have in one place all deal and due diligence files and all documentation that relates to trading, including inspection reports, release notes etc. If Customs hold any relevant documents relating to your outstanding periods and have not provided you with copies yet, you should now be requesting the originals, or at least get copies.
• Ensure that all correspondence to and from HMRC is together and in date order, along with other notes, such as minutes of meetings, telephone notes, emails etc.
• Generally make sure everything is available for inspection and in an orderly state.

Once your appeal to the Tribunal has been accepted, the Tribunal will write to you and give you 30 days to submit a list of documents that you will rely on. A lot of work needs to be completed before the barrister is in a position to do this and getting everything in order will save time.

This may also save additional costs being added while time is spent organising and understanding the files and systems you operate.

Q: What if my Officer is biased and gives an incorrect report to the Policy Team and a decision is made based on incorrect facts.
A: You will see the reasons why your VAT has been disallowed in a detailed letter and, if you believe you have information that was either ignored or not correctly recorded by your Officer, you can forward your comments to Customs and ask them to reconsider their decision. This will then be reviewed by and independent Officer, however, if you do this and Customs continue with their course of action, this will delay proceedings for a month or more.

Q: Customs want to visit my office and ask questions a year after I put my claim in. Can I refuse to meet with them?
A: Customs have the legal power to attend your office and inspect records and ask questions in relation to your business activity. However, there is a great deal of money at stake and there are some questions you may wish to take time to consider, in order to respond as fully as possible. We strongly advise that you are represented at all VAT visits and that all responses to questions regarding deal and due diligence procedures are considered very carefully.

Q: I have stopped trading and my business address is costing me a great deal of money; would it affect my claim if I no longer had commercial premises.
A: Many companies now work from home and simply use their old business address for mail forwarding purposes only. This should have no affect on your claim, and will assist you with funding future action, if required.

Q: I have refused to answer some questions and to provide certain documents because I do not believe they are relevant to my claim; will this cause me problems?.
A: A lack of cooperation has been used as a reason for disallowing VAT (see our April Updated Newsletter, out soon) and you should, unless the request is totally unreasonable, respond as quickly and as fully as possible. You should remember that all correspondence may be put before a Tribunal Chairman and you should consider how they might view it. As frustrating as it might be, you should act in a professional manner at all times and resist the strong urge to say or write exactly what you feel. If needs be, take advice.