Mozibur Rahman and Gazibur Rahman t/a S & H Fashions v Her Majesty's Revenue & Customs

Facts

Mozibur and Gazibur Rahman traded in partnership as S & H Fashions, a cut, make and trim business registered for VAT on 1 November 1998 which supplied garments principally to Hobbs Ltd and Burberry. The brothers had worked as machinists for Honey Fashions from 1986 and bought that business in November 1998, taking over the lease. Honey Fashions had not used outworkers, but the partnership did so initially, and claimed to have used sub-contractors regularly from period 07/99. Before the companies in issue, S&H recorded invoices from Forwell Ltd, Avzone Ltd and Chartwest Ltd, each of which the Commissioners found either deregistered, trading from premises far too small for garment manufacture, or occupying locked and empty units. On 12 June 2003 the Commissioners raised an assessment disallowing input tax of £244,246 claimed on invoices from Delux Clothing Ltd, Golden Tower Clothing Ltd and Oriental Clothing Ltd for the periods 1 May 2000 to 31 July 2002. Customs visits found no manufacturing at the addresses those companies gave, invoices bearing an incorrect VAT number or post-dating deregistration, and common individuals and dates of birth linking the companies. At Mr Rahman's request an interview took place on 23 June 2004, after which the assessing officer maintained the assessment. The partnership appealed to the Tribunal.