Atlantic Electronics Ltd v Commissioners for Her Majesty's Revenue and Customs

Facts

Atlantic Electronics Ltd appealed against three decisions of HMRC, made on 22 May 2007, 28 June 2007 and 28 May 2008, disallowing input tax totalling £1,128,137.50 claimed on the purchase of mobile phones in the periods 03/06, 04/06 and 05/06, on the ground that the company knew or should have known that its transactions were connected with the fraudulent evasion of VAT. HMRC contended that six acquisitions were in chains leading directly to fraudulent defaulters and a further two were in contra chains. The three appeals were consolidated on 10 July 2008 and HMRC served their Statement of Case and List of Documents on 8 August 2008, stating that they would seek costs if the appeal was dismissed. The appeals were still current proceedings when the First-tier Tribunal replaced the VAT and Duties Tribunal on 1 April 2009, so that the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009 took effect and the Value Added Tax Tribunals Rules 1986 ceased to have effect. On 28 October 2009 HMRC applied for a direction under Schedule 3, paragraph 7 of the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 applying Rule 29 of the Value Added Tax Tribunals Rules 1986 and disapplying Rule 10 of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009. The hearing was in fact initiated by the appellant's own application of 21 October 2010 for a direction that Rule 10 should not be disapplied.