Monckton scores ECJ victory in phone traders fraud trial

Monckton Chambers has scored a European Court of Justice (ECJ) victory for a group of mobile phone traders who got caught up in a carousel fraud that cost UK Companies billions of pounds.

The ECJ ruled that mobile phone trader Teleos, along with 14 other companies that bought mobile phones in the UK and sold them to Spanish company Total Telecom, had acted in good faith and taken “every reasonable measure” to ensure it did not deliberately participate in tax evasion.

The case centres around the 15 traders not charging VAT on the mobile phones when selling them to Total Telecom as they believed the goods were being sold to another VAT-registered company in the EU. HM Revenue & Customs (HMRC) later discovered that the transportation documentation and arrangements were either false or suspect, and that the phones had not left the country.

As a result HMRC argued that the traders should not have been entitled to zero VAT duty on the goods due to the fraud. The ECJ disagreed.

Robert Holland, from Dass Solicitors, who instructed Monckton’s Philip Moser to act for Teleos and others, said this case could not be taken in isolation as there had been a string of legal challenges by traders caught up in carousel fraud chains.

“The ECJ is trying to adopt a unified strategy to deal with carousel fraud in the field of VAT,” said Holland. “It appears the court is saying that as long as a trader has acted in good faith and has a reasonable business then they should be entitled to whatever right they wish to claim.”

The case will now return to the High Court.

Ashurst EU and competition partner Denis Waelbroek and sole practitioner Andrew Young also advised Teleos.

Monckton’s Rupert Anderson QC and Rebecca Haynes acted for HMRC, instructed by the Treasury Solicitor.