High Court rules on VAT fraud case
The High Court has found McNicholas Construction Co Ltd guilty of large-scale VAT fraud, upholding the findings of the VAT and Duties Tribunal.
The VAT Commissioners accused McNicholas of involvement in a fraud that began with the registration for VAT of individuals whose businesses were ostensibly those of subcontractors. In some cases, the registration of an individual who was already VAT registered was used.
The fraud was said to involve the payment of money to bogus subcontractors pursuant to bogus invoices under the pretence of paying for the supply of labour. The money was then repaid to McNicholas in cash, less commission, with the cash being used to pay “off-record” or “top-up” wages to labour, which involved evasion of income tax.
The High Court has found McNicholas Construction Co Ltd guilty of large-scale VAT fraud, upholding the findings of the VAT and Duties Tribunal.
The VAT Commissioners accused McNicholas of involvement in a fraud that began with the registration for VAT of individuals whose businesses were ostensibly those of subcontractors. In some cases, the registration of an individual who was already VAT registered was used.
The fraud was said to involve the payment of money to bogus subcontractors pursuant to bogus invoices under the pretence of paying for the supply of labour. The money was then repaid to McNicholas in cash, less commission, with the cash being used to pay “off-record” or “top-up” wages to labour, which involved evasion of income tax.
The commissioners claimed that McNicholass actions caused a loss in VAT revenue by offsetting the “fictitious” VAT on purchases from the subcontractors against the VAT declared on its own sales.
One case was cited in which a taxi driver, who had never worked in the construction industry, had been paid £100 a month for his involvement in the scheme, including the signing of blank VAT returns.
In January 1999 the VAT and Duties Tribunal allowed a number of McNicholass appeals against the 24 VAT assessments, totalling £1,245,545, that resulted from the accusations. However, it dismissed the remainder of the appeals.
That decision has now been backed by Dyson J in all but one case after he found that most of the allegations made by the commissioners had been substantiated by the tribunal.
McNicholas Construction Co Ltd v HM Commisisoners of Customs and Excise Queens Bench Division (Dyson J) 16 June 2000
Charles Purle QC, Michael Sherry and Eamon McNicholas (instructed by Titmuss Sainer Dechert) appeared for the appellant; Kenneth Parker QC and Aidan Robertson (instructed by HM Commissioners of Customs and Excise) appeared for the respondents.
PLS News 19/6/00
