DLA Piper wins lead role on controversial fraud GLO

DLA Piper Rudnick Gray Cary has fought off competition from McGrigors to be appointed as lead solicitor in a group litigation order (GLO) for a potential 150 companies claiming damages against the government that could run into millions.

The companies are claiming for losses caused by Revenues & Customs, which has penalised them for their unknowing involvement in Missing Trader Intra-Community (MTIC) fraud.

Simon Airey, director of national tax investigations at DLA Piper, said: “There are obvious cost benefits for potential claimants in participating in a GLO, but this is just the first step in what will certainly be a long running and hard fought litigation.”

The court appointed DLA Piper to lead the case. The firm is now working with Revenue and Customs to define the legal issues that relate to the claim. A number of other firms such as Hassan Kahn & Co, Pannone and Airey’s former firm Dorsey & Whitney are likely to be advising clients that join the GLO.

MTIC fraud is highly controversial and has hit the headlines recently because of the multi-billion pound threat is poses to public finances.

It occurs when companies obtain VAT registration to acquire high-value goods such as computer chips and mobile phones VAT-free from other EU Member States. They then sell on these goods at VAT inclusive prices and the companies disappear without passing on the VAT paid by their customers to the tax authorities.

The government’s attempts to clamp down on this fraud by refusing to repay VAT has caught up traders, who claim to be completely innocent. The European Court of Justice (ECJ) found in the Bond House case that innocent traders, who have no knowledge of the fraud, are entitled to have their VAT repaid.