Mobilx Ltd Appeal - UK Legal News June 2010

Bark & Co acted for Mobilx Ltd in the recent Court of Appeal case against an earlier ruling in favour of HMRC. This complex case concerned three seperate appeals, two by taxpayer companies and one by Revenue and Customs Commissioners from decisions upholding HMRC’s decision to refuse input tax credit claims by mobile phone traders. The issue was whether the Tribunal and the High Court had applied the test set out in an earlier case (Kittel v Belgium) that “having regards to objective factors, that the taxable person knew or should have known that, by his purchase, he was participating in a transaction connected with fraudulent evasion of VAT”.

The Court of Appeal held that the courts had, indeed, applied the wrong test, but, on the facts, their decisions were still reasonable. As a result, it dismissed all 3 appeals.

Andy Lynch: “The defendants effectively ‘won’ the legal arguments, but the court was still prepared to come down in favour of HMRC”. He went on to say that the possibility of an appeal was still being actively discussed and points out that “these cases still have legs, however I don’t think there will be any proper resolution of the issues until the ECJ clarifies the test”.