Manchester-based reseller Aria Technology Ltd is appealing against a tax tribunal finding that MD Aria Taheri “knew or ought to have known” that it took part in a VAT carousel fraud.
The case – which is ongoing at the Upper Tribunal, Tax and Chancery Chamber, sitting at London’s Rolls Building – is an appeal against a First-Tier Tribunal (FTT) ruling from 2016. In that ruling, Aria Technology Ltd (ATL) was found to have made a number of sales of CPUs and monitors that were connected to VAT fraud - specifically, missing trader intra-community fraud (MTIC, see box to the right).
ATL, represented on appeal this week by barrister Michael Firth of Gray’s Inn Tax Chambers, argues that the FTT made findings of fact that were wrong, failed to give reasons for rejecting some of ATL’s evidence and witness statements from ATL employees, and also challenges the FTT’s decision that ATL had to pay the Her Majesty's Revenue and Customs' (HMRC) legal costs.
Between yesterday and today Firth went through the findings from the previous case in great detail before judges Mr Justice Roth and Tribunal Judge Richards, adding that public reporting of the case had caused “adverse public comment about Mr Taheri and it's important that that is put right, in reputational terms as well”.
“On one hand Mr Taheri wasn’t involved on the practical side of carrying out the deals. What are we supposed to infer from what he claimed he did or did not do? It’s the lack of primary facts, we have to work them out for ourselves,” Firth told the tribunal.
Mr Justice Roth commented: “HMRC’s case is there is evidence and you can draw an inference.”
Later on in proceedings, ATL’s brief tackled the FTT’s finding that Aria Taheri had had a “full understanding” of VAT fraud, which was said to have been based on warning letters sent by HMRC to ATL when he had a VAT rebate denied. A scornful Firth said: “That is wrong. The appellant had never had his input VAT denied. That’s just wrong. This is the only reason we’re given for the finding Mr Taheri had a full understanding of MTIC fraud, not just carousel fraud. The only reason we’re given is because you’ve had input tax denied in the past.”
One of the disputed deals was a sale of Intel CPUs. An expert witness, Dr Findlay, told the FTT that the CPUs were boxed for retail sales (VAT therefore being due) rather than on trays for trade sales, where VAT would have been refundable. ATL disputes this, saying they were in trays and that the transaction was clearly a trade sale, though it was a point of dispute as to whether the paperwork said the chips were in trays or boxes. Boxed CPUs are normally sold to retail customers.
Later in the hearing, Mr Justice Roth expressed his disapproval of Firth’s line of argument. ATL’s barrister, discussing why the FTT rejected the evidence of ATL's purchasing manager Eddie McFadden, complained: “You can't just rely on the demeanour of the witness... you can't just say it’s unconvincing; that’s a conclusion, not a reason.”
A frowning Mr Justice Roth replied: “It would make a large number of judgements of this court unenforceable. It is common for judges to say they are not impressed by the witness’s evidence.”
“The difference between no detail, my lord, and some detail – I’ve not seen a judgement from the Upper Tribunal or the High Court say ‘we’ve not found a witness convincing’, full stop,” Firth told the judge.
Stony-faced, Mr Justice Roth said: “If you think of a witness who is not giving truthful evidence, you can, on that basis, say you don’t find them convincing. That’s basics, isn’t it, saying someone is unconvincing if you don’t think what they’re telling you is truthful.”
Firth responded: “You have to say why! You have to say they’re untruthful for these reasons.”
HMRC’s barrister, James Puzey of Birmingham’s St Philips Chambers, is expected to begin giving his response to ATL’s arguments late this afternoon. The case continues. ®
The Register asked HMRC’s legal team for a copy of their barrister’s skeleton argument. This is his script for the trial. It is both settled law and routine practice that barristers provide copies of their skeletons to the press so reporters can follow the legal arguments.
HMRC refused to do this, saying that it had a duty of confidentiality to “the taxpayer” (ie, its opponent, Aria) and told us we would have to make a formal legal application to see it, saying that ATL had refused permission for it to be handed over. When our barrister, Greg Callus of 5RB, turned up, Aria Taheri readily agreed to show us copies of both his own brief’s skeleton and HMRC’s.
The Court of Appeal has ruled twice that the public are fully entitled to request and see copies of skeleton arguments “as of right”.