Distribution company wins €6.54m tax row with Revenue

A distribution company has won a tax row with the Revenue Commissioners concerning a disputed €6.54 million VAT bill.

The Tax Appeals Commission upheld the company’s appeal and found that the €6.54 millon VAT assessment issued by Revenue to the unnamed firm for the years 2013 to 2018 should be reduced to zero.

Revenue issued the €6.54 million 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 was liable for the foregone VAT.

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However, in his twin ruling after four days of evidence at the commission, appeals commissioner Simon Noone has found that Revenue 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 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.

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As part of a 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 €6.54 million VAT assessment was raised against it, and instead said that any such response could be provided in the context of an appeal to the commission.

He said 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.

Mr Noone said that if the firm had not appealed the €6.54 million assessment, the bill would have been payable within 14 days.

He said that in the circumstances, it was difficult to understand the basis on which Revenue contended that the making of the assessment did not adversely affect the rights of the firm.

The firm told the commission there was no evidence of how it should have known that the sales of its product were connected to fraud.

The company also told the commission that there was no evidence that all 12 of the “missing traders” were connected with each other.

The case is set to be referred to the High Court after the commission confirmed it had been asked to state and sign a case for the opinion of the High Court in respect of its determination.