Computer parts reseller Aria Technology, which trades as Aria PC, is appealing against a ruling that it defrauded the UK taxman out of £750,000 of VAT.
The Tax Chamber of the First-Tier Tribunal (FTT) ruled in 2016 that Aria Taheri, the Manchester-based firm’s sole director, “must have known of the connection to fraud” when his company took part in a series of sales that ended up depriving HM Revenue and Customs of £758,770.69.
The taxman’s minions initially ruled that Aria needed to cough up an extra £313,613.71 to cover the company’s own VAT bill, with the tribunal upholding that. Aria has appealed; the appeal is due to be heard next month.
Aria (the company) was found to have taken part in a missing trader intra-community fraud (MTIC, or VAT carousel fraud). Tribunal Judge Jennifer Dean found (PDF, 93 pages) that Aria supplied tech goods to a number of small firms that reclaimed the VAT without being able to show proper accounts backing up their claims – including one registered business whose director, in the judge’s words, "had become interested in the trade after a meeting with two men in a nightclub who told him about it".
Those goods included Intel CPUs and TFT monitors.
Permission to appeal was granted to Aria by the Upper Tribunal, which is the next most senior tribunal up from the FTT. The firm's arguments have boiled down to assertions that HMRC's case was contradictory; that the judge took a one-sided view of the evidence against Aria; and that the judge did not take all of the evidence into account and had selectively quoted Taheri. Aria has also argued that Taheri did not know enough about the deals to realise they were fraudulent, as well as asserting that he was not fully aware of what MTIC fraud was and therefore did not recognise the warning signs in his firm's suppliers.
For its part, HMRC argued in its written response to Aria that its "grounds of appeal attempt to reopen the findings of fact, paragraph by paragraph, in the decision of the FTT" and that "these attempts to do not meet the legal requirements for such a challenge". Barrister James Puzey said on the taxman's behalf: "This compendious attack is essentially a complaint that the FTT did not agree with the Appellant's arguments."
Puzey added: "The fact that the FTT does not cut and paste the appellant's written submissions is not an error of law. Neither is the failure to address every point raised by the appellant."
Taheri told The Register: "Of course I believe that Aria Technology Ltd (ATL) is innocent and I strongly feel that if the decision has gone against ATL, then it should be through employing a fair reasoning process - something that ATL is entitled to. In effect, HMRC is collecting what they should have collected from the supply chain from ATL.
"The people who supplied ATL reclaimed their taxes and received them in full, shut up shop and went away. HMRC came to ATL, a trading company with assets that they deemed they could properly go after."
The Register understands that Taheri, on behalf of his company, is mulling a judicial review of the original FTT decision. ®
The Register argued against Taheri at an earlier legal hearing and won the right to view the papers in this case, setting a legal precedent in the process that allows anyone else to use our successful judgment to do the same thing.