Case Studies

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  • VAT Food Industry

  • The first represent the Subway chain of restaurants in various VAT issues. Read more

Dass Solicitors News

VAT News – Calling all Box-Breakers

In February 2013, HMRC released amended Notice 735 (“the Notice”) which explains how the reverse charge procedure applies to the sale and purchase of mobile telephones, BlackBerrys, computer chips and other communications’ devices.

The reverse charge does not apply to goods with a VAT-exclusive value below £5,000. This is known as the “de minimis” limit.

The Notice states that where a purchaser receives multiple purchases of specified goods in a single day from a retail outlet, that is, £40,000 worth of Apple iPhones from various Apple retail outlets, the purchaser is to be treated as having made one £40,000 purchase in respect of which the reverse charge should apply, with Apple providing one reverse charge sales’ invoice in the sum of £40,000.

Owing to the nature of the trade, it is impossible for purchasers to meet these requirements and yet, if they do not, the Notice threatens any number of actions by HMRC, such as joint and several liability, disallowance of input VAT, assessments for suppliers’ output tax.

It is said in the Notice that these requirements are necessary for the prevention of fraud and yet there can be no fraud in a supply chain which starts with, for example, Apple.

In drafting the Notice in the way that they have, what HMRC are really trying to do is to stamp out “box breaking”, not because it is fraudulent but because it involves the buying and selling of mobile telephones in a manner in which HMRC simply do not understand.

Dass Solicitors believes that the Notice and its application can be challenged in judicial review proceedings. If you are a box breaker but have not, for example, been purchasing the new BlackBerry’s because of fears over the Notice and any correspondence which you have received from HRMC relating to the Notice, please contact Dass Solicitors Fraud / VAT team today.

London: Dipak Jotangia +44 (0) 207 802 5040 / +44 (0) 7976 288 297
Birmingham: Robert Holland +44 (0) 121 248 4000