United Kingdom VAT & Duties Tribunals Decisions

Micropoint(UK)Ltd v Revenue & Customs [2006] UKVAT V19630 (22 June 2006)

19630

Input tax – Whether supplies evidenced by invoices were made – Purchase and sale by Appellant of cine-projectors on pallets in warehouse of freight forwarder – Appeal dismissed

LONDON TRIBUNAL CENTRE

MICROPOINT (UK) LTD Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents Tribunal: THEODORE WALLACE (Chairman) MRS LYNNETH SALISBURY JP

Sitting in public in London on May 15 and 16 and June 1 and 2, 2006

Andrew Young, instructed by Dass, Solicitors, for the Appellant

Owain Thomas, instructed by the Acting Solicitor for the Respondents

© CROWN COPYRIGHT 2006
DECISION
1. This appeal is against an assessment for £88,440 VAT arising out of the disallowance of input tax shown on an invoice from The Big Store Ltd for cine projectors.
2. The invoice which was dated 22 October 2003 was for supplies of 24 Runco CL 510 Projectors, 24 Runco CL 710 Projectors and 48 Barco Cine 7 Projectors. The input tax was disallowed on the footing that the Appellant did not receive a supply of the projectors shown on the invoice.
3. The Appellant's case was that it bought the projectors which were in a warehouse operated by Worldspan Freight Services Ltd ("Worldspan") from The Big Store Ltd; that Worldspan had checked and counted them and that following a sale by the Appellant to Cachet Trading SL ("Cachet"), a Spanish company, Worldspan had despatched the projectors to a warehouse in Belgium for Cachet.
4. The basic case for Customs was that for a variety of reasons the Appellant could not have bought those quantities of Runco and Barco projectors and that by reason of their weight and size that quantity of projectors could not have been transported as shown on the CMR (International Consignment Note).
5. We heard eight witnesses all of whom confirmed witness statements and were cross-examined. The Appellant's witnesses were Brian Webber, the general manager; Ed Fermor, who was at the time a director of The Big Store Ltd ("Big") now in liquidation; and Ken Ballard, director of Worldspan.
6. The witnesses for Customs were Vincent Gregory Mark D'Rozario and Steward Yule, both Customs officers; Andrew Rutland, project manager, and Michael Banton, financial controller, both of Barco Ltd; and Mrs Christine Chrysostomou, who was at the time company secretary of Gecko Inc Ltd, the sole UK distributor for Runco CL 510 and CL 710 Projectors.
7. Mr Webber said that the Appellant's business consists of the general distribution of computer components and the wholesale brokering of computer parts and mobile telephones. When brokering the Appellant orders goods normally held at the premises of freight forwarders to meet the requirements of customers.
8. He said that in the middle of October 2003 he received a random approach from Nick Hardy, of Cachet, who said that he had got the Appellant's details from its website and was interested in buying particular kinds of projectors. Mr Webber had not dealt in projectors before but knew the names, Runco and Barco. Mr Hardy provided a copy of a Spanish Identification Fiscal for Cachet Investments SL, banking details of Cachet Trading, showing the account holder as Cachet Investments SL, and details of Cachet Trading. Mr Webber did not query the difference in name nor the fact that the address in one was Malaga and the other Marbella. He said that he confirmed the name and VAT number of Cachet Trading with Customs' Central Advice Unit. He then contacted Mr Hardy again and Mr Hardy told him that Cachet was interested in buying 48 Barco Cine 7, 24 Runco CL 510 and 24 Runco CL 710 projectors.
9. Mr Webber said that he contacted various suppliers without success and then went onto the website of International Phone Traders where he found Big's name. He exchanged details with Ed Fermor of Big, who sent copies of Big's certificate of incorporation and VAT registration and bank details. He said that having validated Big's VAT number he visited Big's premises at Chobhan, Surrey, to see how Big's business operated. He left a new company application form of three pages which Ed filled in and returned dated 24 October. He telephoned two references provided, Aviette and Key Beam Technologie; both confirmed that Big was reliable.
10. He said that Ed contacted him on the day of the visit stating that he could provide the projectors which were at the premises of Worldspan, a company which the Appellant knew and used. Ed told him that the goods came with a manufacturer's warranty, which he accepted, and quoted a price. He then telephoned Nick at Cachet and agreed a price which would give a margin over Big's price. He knew that the distributors for Runco and Barco would not deal with him.
11. Mr Webber produced an invoice from Big dated 22 October 2003 for

24 Runco CL-710 @	£5,847.09
24 Runco CL-510 @	£3,595.48
48 Barco Cine 7 @	£5,807.39

for a total of £505,376.40 plus £88,440.87 VAT. This is the disputed invoice. He produced an invoice to Cachet Trading dated 23 October 2003 with unit prices of £6,095, £3,740 and £6,040 respectively totalling £525,960 with no VAT, being zero-rated.

12. He stated that Cachet paid and that once this was done the Appellant paid Big: once Big were paid they released the goods to the Appellant which in turn instructed Worldspan to release the goods. Bank statements and payment details show the Appellant being paid between 21 and 30 October and paying Big on 28 and 31 October.
13. Mr Webber said that he himself never saw the goods and that no one at Big did to his knowledge. The goods were at Worldspan. Mr Ballard at Worldspan confirmed to him by fax on 23 October that the projectors were on four pallets and had been inspected and counted. The fax stated that two pallets contained 48 Barco Cine 7 Projectors and two contained Runco CL 510 and CL 710 Projectors. He had no reason to doubt the inspection report. Nick at Cachet told him that the goods were to go to Cachet's freight forwarder, P & S Handelsondernewing BV ("P&S") at Breda, Holland, and he instructed Worldspan accordingly.
14. Worldspan despatched the projectors on four pallets to P&S "on hold pending our release". The CMR showed the date of despatch as 23 October, the carrier as M. B. Express and the weight as 1200 kgs. An invoice from Worldspan to the Appellant for shipment showed the date as 23 October and the weight as 1000 kgs. A Fax from Worldspan to P&S dated 23 October stated that projectors were being sent that night arriving 3am in a Renault Master driven by Mr M. Bullen. In a fax dated 28 October to Worldspan P&S confirmed that the projectors had arrived and were "on hold". Once paid by Cachet, the Appellant instructed Worldspan to release the goods.
15. Mr Webber said that there was no complaint by Cachet about the projectors. Mr Yule from Customs verified the return claiming the input tax and a repayment was received. He was unaware of any problem until January 2004. Customs had offset this input tax against a later repayment.
16. In answer to questions from Mr Thomas, Mr Webber said that he did not query the difference between Cachet Trading and Cachet Investments or the different address. He did two more transactions with Cachet about the end of 2003 but had not contacted them since although he had tried. He had told Cachet that the goods came with a warranty. Asked where the warranty was, he said that it was probably inside some packaging: it would have been necessary to open the box to check it. Cachet had not asked for the serial numbers. He did not know whether the warranty would be effective without the serial numbers.
17. He said that he completed between 30 and 50 transactions daily, including some with the Far East. He could not remember all the transactions in which he was involved.
18. Mr Webber said that he had dealt with Worldspan before and knew of Mr Ballard. He was told afterwards that Worldspan had sub-contracted the carriage to M B Express. He did not know Mr Bullen. He had been unable to contact P&S after the letter in January 2004 disallowing the input tax. He agreed that he had no personal knowledge of Cachet, Big or the products. He did not accept that if he had been diligent he would have ensured that the serial numbers were kept.
19. He said that he had around 100 to 200 telephone conversations each day. There were about four sales staff; he did not handle all transactions himself but he had dealt with the projectors.
20. Mr Fermor confirmed his statement in which he said that when the Appellant paid for the projectors Big had released them and that Big had accounted for the output tax on the invoice to the Appellant and that Customs had not returned it.
21. He said that he would not have personal knowledge of goods which he traded and would have to research them. It was never a prerequisite to have serial numbers. There was nothing unusual in the way the Appellant had contracted Big. He had bought the goods from Ocean 3 Ltd.
22. Cross-examined, he said that Big went into liquidation in 2004. He said that Big was on monthly returns and he imagined the VAT had been paid on the 10/03 return. When it was put by Mr Thomas that the 10/03 return was not rendered, he said that the reason was that it had been sent to the wrong address. He then said that an assessment had been issued which caused the company to close and that he could not now say that Big had accounted for the VAT. He could not say why Big released the projectors before it was paid. He said that a retention of title clause would normally be sent separately; he had not been asked to produce it.
23. Re-examined, he said that Customs had all Big's documents having uplifted them before the company went into receivership.
24. Mr Ballard stated that Worldspan has been in business for approximately 27 years as a freight forwarder; it is based at Southend Airport.
25. He said that his office is in a separate building from the warehouse. He said that one of the warehouse staff had given him the information contained in his fax of 23 October referred to at paragraph 13 above. He said that it was routine practice to inspect goods; normally 10 per cent of mobile phones and high technology goods were inspected and 100 per cent were counted. Customs officers regularly attended the premises and sometimes inspect and counted goods often jointly with staff.
26. He said that he had no prior knowledge of P&S. He said that transport to the Continent was normally sub-contracted to one of three couriers all of whom had been vetted. Any one of the staff might have chosen M B Express. M B Express had used a Renault van to which they normally attached a trailer when going to the continent.
27. He said that Worldspan had pallets of different sizes. He was certain that the projectors would have fitted on four pallets. For transport by sea pallets would not necessarily be weighed if the vehicle was not overweight.
28. Cross-examined, Mr Ballard said that he knew Mr Bullen, who was the sole operator of M B Express.
29. He said that he had filled in the CMR. He suspected that he had estimated the weight (1200 kgs); it was irrelevant to the actual shipment, although he tried to get it right. The CMR showed the stamp of P&S evidencing receipt of the goods.
30. He said that he had not seen the load or the van. Mr Steve Forman, a driver at M B Express, told him that they use a trailer when needed. Mr Ballard said that it would have been possible to fit the pallets on the Renault with a trailer. Asked about the Seafrance booking confirmation for the vehicle on 23 October, he said that the trailer would not be shown because it did not have a registration number.
31. Mr Ballard said that it would be possible to get 16 Barco projectors onto a pallet based on the dimensions shown on the website which he took to be box measurements. He said that a standard Euro pallet measures 120 x 80 cms, but sometimes they use 120 x 120 cms to utilise the space between the wheel arches. He said that it would be possible to get four projectors to a layer with four layers, making sixteen to a pallet. He did not know how much packaging there was but he had been told that the goods were delivered on four pallets. Mr Ballard produced a website document showing the dimensions of a Barco Cine 7 as 73 cms long, 30 cms high and 55 cms wide, with net weight 39 kgs and shipping weight 56 kgs.
32. He said that in his statement he had estimated the load as weighing 2,418 kgs and agreed that if that was correct the 1,200 kgs on the CMR was fundamentally wrong. He said that a standard trailer would carry roughly the same as the Renault van, between 1200 and 1800 kgs.
33. He agreed with Mr Thomas that a test report on a Renault Master showed load areas of up to 13.9 cubic metres and a payload of up to 1,691 kgs.
34. He agreed with Mr Thomas that a shipping note for a Cine 7 projector gave the dimensions of the package as 90 x 70 x 55cms which made 0.3465 cubic metres and that 48 projectors would need 16.6 cubic metres, compared with the Renault Master capacity of 13.9 cubic metres.
35. Overnight Mr Ballard produced calculations for the Runco projectors based on the measurements shown on the website which were the same for the two models, namely 41 x 37 x 15cms making 0.0227 cubic metres each and 1.09 cubic metres for 48 projectors.
36. He said that the Barco and Runco projectors together would occupy 17.69 cubic metres, so that if the Renault Master was loaded to capacity only 3.79 cubic metres would need to go on the trailer, although in fact the load would have been more evenly distributed.
37. Mr Ballard said that if pallets did not fit on to a vehicle, the goods would sometimes be rearranged. Since the CMR said four pallets, that was presumably what was delivered. It was unlikely that one pallet would have been stacked on top of another. He said that the vehicle would accommodate three pallets of 120 x 120cms or five of 120 x 80; it was very difficult to load any vehicle to full capacity. The trailer was roughly the same size as the vehicle. He said that he could not see why the projectors would not have fitted onto a vehicle with a trailer.
38. He said that there was nothing to show that the pallets had been changed after they came into the warehouse, although if the goods had not fitted they would probably have been repalletised. He had not seen the loading but if there had been problems he would have been told. The Renault Master was a long wheel-based high top vehicle.
39. Mr Rutland, Project Manager with Barco Ltd, said that its parent company was Barco NV in Belgium. In 2003 there were Barco companies throughout the world. Cine 7 projectors were made by a subsidiary company in India. They were home cinema projectors for domestic use producing high quality video images. The home cinema business had since been sold.
40. He said that Barco did not hold the projectors in stock. They were made to order. Demand was from small hi-fi shops selling high quality systems. Installation required special training. Barco sold only through approved distributors. Only one or two Cine 7s were sold in the UK in a month. He said that Barco had never to his knowledge sold 48 projectors in one transaction and would have followed up any enquiry.
41. He said that the serial number was located on the outside of the packaging box and would be needed for any claim under warranty. The projectors were fragile: a diagram on the side of the boxes showed that they should be kept flat. With packaging the boxes measure 90 x 77 x 55cms; a pallet underneath would take another 15cms. Barco would transport two per pallet at the maximum. Given the dimensions he did not consider that four boxed projectors could be loaded side by side on a pallet.
42. Cross-examined, he told Mr Young that Barco was sold to a French company; he did not believe that it traded Cine 7s. The Cine 7 had been discontinued. Any surplus stock would have been transacted through Belgium and recorded, being offered first through their distributors. He said that he could not be sure that the Indian company would provide all information to Belgium.
43. He said that since the boxes were 90 x 70 it was not possible to put two side by side on a 120 x 120 pallet. If the boxes overlapped the pallet, it would be dangerous when picking them up with a fork lift. With packaging and pallet a single projector weighed up to 57 kgs. He said that if four boxes were stacked on top of one another, they would be 2.2 metres high. When Barco shipped a projector it was centralised on a pallet.
44. He told Mr Thomas that the weight distribution of a projector is uneven, the front end being heavier. A nylon or plastic band was used to secure the box to the pallet. The packaging was of polystyrene.
45. Mr Barton, Financial Controller with Barco, said that there was no way in which even 10 or 20 Cine 7 Projectors would have been manufactured in one go. It was not Barco's practice to hold stock. Orders went through Belgium. Only twenty Cine 7 Projectors were supplied by Barco UK between 1 January and 26 November 2003. The Indian company was a wholly-owned subsidiary which was well audited and managed.
46. He told Mr Young that it was policy only to use dedicated dealers throughout the world. He could not say if surplus stock in North America was sold on the grey market. All stock was traced through distributors; warranty claims were only possible with the serial number.
47. He told the Tribunal that it would take 6-8 weeks to get delivery from India via Belgium of a new order.
48. Mrs Chrysostomou said that until resigning 2-3 weeks ago she was company secretary of Gerko Inc Ltd, the sole distributor for Runco CL 510 and CL 710 projectors which were manufactured in USA by Runco International. The products had only been introduced to the UK market in May 2003. The trade selling price of the CL 510 was £3,306.69 plus VAT and that of the CL 710 £6,618.08 plus VAT. They were sold by nineteen approved dealers, all of whom had training for specialist installation. The installers obtained an access code from the service manager; it would not be given to the general public. Projectors for the UK market operated on 240 volts. There was no wholesale market. The largest stock held was five; the most Gecko Inc Ltd had bought at a time was ten. She did not believe that it was possible that 24 had been sold together. The boxes which measure 55 x 52 x 25 CMS carried serial numbers on the outside. She kept a spreadsheet of each projector coming in with the serial number.
49. She told Mr Young that each projector stated the voltage. Projectors for the UK market would not run on 110 volts. All Runco distributors know that they can only sell in their own country. A person buying abroad could not obtain an access code without a rogue dealer.
50. Mr D'Rozario produced invoices from Hillcraft Trading Ltd dated 22 October 2003 for 24 Runco CL 510 and 24 CL 710 Projectors and 48 Barco Cine 7 Projectors to Sound Solutions Ltd and an invoice from Nelso Software UK Ltd to Hillcraft Trading Ltd on 24 October for identical goods; he stated that Mr Bradshaw of Hillcroft Trading Ltd said that he used the services of Worldspan Freight Services Ltd. He said that a computer print-out showed that the 10/03 return for Big was not rendered although that for 11/03 was.
51. Mr Yule said that he had worked on an MTIC team since September 2002. He had regularly verified the Appellant's accounting records in connection with repayment claims. The Appellant's return for 10/03 claimed £477,029.25 and on 13 November 2003 he visited the Appellant. All expected accounting records were seen; those would have included freight forwarding documents, bank statements, purchase and release orders. He produced his notes which covered three A4 pages and included the invoice from Big and the sale to Cachet Trading with delivery to P&S. He was satisfied that the repayment should be made and authorised repayment on 20 November 2003.
52. On 25 November 2003 Mr D'Rozario had contacted him saying that, having contacted the Barco and Runco distributors, he had doubts as to the Barco and Runco Projectors. From the information provided by Mr D'Rozario he concluded that the invoice from Big was invalid because the description of the goods was wrong. On 26 January 2006 he made an assessment disallowing the invoice.
53. Cross-examined, Mr Yule said that he had not seen any of the distributors and had not made any enquiries about Worldspan; he had not checked whether the vehicle had travelled. He said that he did not do much background work. Mr D'Rozario had sent details of his inquiries and Mr Yule was happy to make his decision on that material. The manufacturers had said that the number of projectors was not feasible.
54. Asked about Mr Webber's due diligence, he said that he would not say that there was anything wrong with what he had done, although possibly he could have done more. He said that it was not unusual to use a website to locate Big. Customs recommended people to visit those they traded with. There was nothing irregular on Mr Webber's checks as to the VAT status. He was satisfied that the Appellant paid Big and that the Appellant was paid. He was not aware of the results of any enquiries to Spain, but it was not easy to get answers from there. He was not aware of any particular concerns about Cachet apart from the differing names and addresses.
55. Although the hearing had been listed for two days based on the estimate by both parties, the evidence was only completed at the close of the second day and a further hearing was listed for closing submissions, including legal submissions.
56. At the start of the resumed hearing, Mr Thomas applied to put in evidence a fax to Mr D'Rozario from Seafrance dated 26 May 2006 which conflicted with the booking confirmation referred to at paragraph 30. Mr Young objected saying that his solicitors had only received a copy at 4.15pm on the previous day giving no time to check the evidence; he said that if the fax was admitted the Appellant would wish to call the driver, Mr Bullen, and to recall Mr Ballard. Mr Thomas said that he would resist an application to call Mr Bullen : his evidence was relevant before the fax.
57. The Tribunal refused the application by Mr Thomas. The evidence had been concluded. The booking confirmation was in the Appellant's List of Documents served in 2004 giving ample time for Customs to make inquiries of Seafrance. The suggestion that there was no shipment at all by Worldspan was not in the Statement of Case and had not been put to Mr Ballard.

Submissions

58. Mr Thomas, for the Respondents, submitted that the transaction described on the invoice from Big did not take place. The only witnesses who had seen Barco or Runco projectors were Mr Rutland, Mr Banton and Mrs Chrysostomou. Although he did not challenge the honesty of Mr Ballard's evidence, Mr Ballard was reliant on what he had been told by other people: he had not seen the goods and he had not seen the vehicle used or any trailer.
59. He said that the goods were unusual for this type of appeal, being highly specialised and having no wholesale market. He said that the numbers involved were not credible. He said that the goods were bulky and fragile with an uneven weight distribution. It was wholly improbable that the boxes could have fitted onto four pallets. Nor was it apparent how four pallets could have fitted onto the Renault with a trailer. There was no documentation to show that a trailer was used. He said that the figure of 1200 kgs on the CMR was a gross under-estimate and must have been provided by someone other than Mr Ballard.
60. Mr Thomas said that the shipment by Worldspan was before payment without any evidence of retention of title. There was no evidence as to what Cachet might have done with the goods. He commented on the absence of serial numbers.
61. He said that in order to give rise to a right of deduction the goods must have been delivered and the trader must hold an invoice, see Terra Baubedarf-Handel GmbH v Finanzamt Osterholz-Scharmbeck (Case C-152/02) [2005] STC 525 at [34]. The invoice must comply with Article 22.3 of the Sixth Directive, see Jeunehomme and another v Belgium (Cases 123/87 and 330/87) [1988] ECR 4517 at [14]. He also referred to EC Commission v Netherlands (Case C-338/98) [2003] STC 1506 at [74].
62. Mr Thomas said that the mere fact that a person holds documents in respect of purchases purporting to be VAT invoices showing that he has paid VAT does not give any right to deduction or refund where no underlying supply has taken place, see Genius Holding BV v Staatssecretaris van Financiën (Case 342/87) [1991] STC 239 at [8]-[20] and Customs and Excise Commissioners v Pennystar Ltd [1996] STC 163 at 165f.
63. He said that the reason for providing a proper description of "the quantity and nature of the goods supplied" was emphasised by Advocate General Jacobs in Finanzamt Gummersbach v Bockemuhl (Case C-90/002) [2005] STC 934.
64. Mr Thomas said that the burden of proof rests on the Appellant throughout, see Grunwick Processing Laboratories v Customs and Excise Commissioners [1987] STC 357. There was insufficient evidence that the claimed supplies took place: if any transaction did take place it was not for the goods shown on the invoice. He said that Customs did not have to show that the Appellant was involved in any fraud and were not saying that Mr Ballard or anyone in Worldspan was fraudulent. He said that the invoice from Big did not satisfy the requirements of regulation 14(1)(g) of the VAT Regulations 1995.
65. Mr Young for the Appellant said that the case turned on the evidence : he accepted that if there was no supply there was no input tax but submitted that there was a supply. The Appellant bought projectors from Big for which money passed. The goods passed through the warehouse and were inspected. The examiner might have been mistaken but at the least the packaging conformed to the description. There was evidence of a chain of supply which was prima facie genuine.
66. He said that Mr Ballard had said that the goods could have fitted into the Renault with a trailer which an employee of MB Express said would be quite usual. It may have been that the goods were not appropriately packed. If the goods were damaged this would not have affected the fact of the supply. No one knew how the goods were packed. The real question was whether it was possible that the goods could have fitted.
67. Mr Young said that Customs had called the distributors as witnesses rather than the manufacturers. He said although the Barco projectors had been discontinued, the manufacturer must have had components and submitted that it is quite usual for goods to appear on the grey market when discontinued.
68. He said that the Tribunal should start with an assumption that there was a proper inspection at Worldspan and draw a common sense inference that the goods were as described. There was no evidence of transactions vitiated by fraud. The goods might have been reconditioned. He said that Mr Yule had accepted that the Appellant had shown due diligence. He said that there is no legal requirement to record serial numbers and submitted that it is not normal commercial practice. He said that traders taking all reasonable precautions to ensure that these transactions do not form part of a chain which includes a transaction vitiated by fraud must be able to rely on the legality of those transactions, see Customs and Excise Commissioners and Attorney General v Federation of Technological Industries (Case C-384/04) ECJ 11 May 2006 at [33]. He submitted that more evidence was required to justify an allegation that there was no supply. He submitted that the Appellant had shown that there was a supply : the level of proof required must be reasonable in relation to the issue. He said that Grunwick was decided before the enactment of the Human Rights Act 1998. In this case the evidential burden had shifted to Customs.

Conclusions

69. Although a substantial number of authorities were cited, this case depends on the facts. The right to input tax depends on a supply for the purposes of taxable transactions by the Appellant evidenced by an invoice with the necessary details. This case is not about whether the details were sufficient or whether alternative evidence should have been accepted but about whether the Appellant has established that it received a supply of Barco and Runco cine projectors. The burden of proof is on the Appellant to show this on the balance of probabilities.
70. We accept that the evidence required to show this must be reasonable and proportionate to the case. It is unfortunate that some two months passed between Mr D'Rozario contacting Mr Yule informing him of his doubts about the projectors and Mr Yule contacting the Appellant again and that there was no attempt by Customs to contact Worldspan. Although Mr Thomas commented on the fact that the driver, Mr Bullen, was not called and that no witness other than Mr Ballard was called from Worldspan, it seems to us very doubtful that witnesses would have remembered a specific transaction once thee had been a material delay. Inevitably in cases of this type much of the evidence is not first hand, including that called by Customs.
71. The logical starting point is the evidence by Mr Rutland and Mr Banton as to the Barco projectors and by Mrs Chrysostomou as to the Runco projectors. While none of those persons was involved in the manufacture of the products, all could speak from first hand knowledge of the projectors.
72. We accept the evidence of Mr Rutland and Mr Banton that a very small number of Barco projectors was produced and sold. In the light of their evidence we are satisfied that it is not conceivable that 48 Barco projectors would have been available in the UK either through authorised distributors or on the grey market. We also accept the evidence of Mrs Chrysostomou that there was no wholesale market in Runco projectors, that they had only been introduced in the UK in 2003 and that specialist installation was needed.
73. In our judgment it is highly unlikely that either 48 Barco projectors or 48 Runco projectors would in fact have been available for sale in lots let alone in a combined lot. It was not a case of Mr Weller finding how many projector Big could supply and then asking Cachet if they wanted those numbers, but of Cachet asking for those numbers and Big finding that a consignment of exactly those numbers was in a warehouse, no more and no less.
74. There was no suggestion that either the Appellant or Worldspan were involved in any fraudulent activity. Mr Weller had not dealt in projectors before and there was no evidence to show that he would have been aware that the market was not narrow. Nor is there any reason why Mr Ballard could have known. That does not however alter the fact that the coincidence between the numbers sought by Cachet and those at Worldspan strains credibility.
75. While we accept that Mr Ballard was an honest witness, we do not accept his opinion that the projectors in their boxes could have fitted onto four pallets which could have been accommodated onto a Renault with a trailer.
76. We accept that boxes, which he was told by a member of his staff contained projectors stacked onto four pallets, were consigned to P&S in Holland being carried by M N Express. The Appellant has not however satisfied us that those boxes contained Barco and Runco projectors. The difference between the weight entered onto the CMR and the actual weight of such projectors with packaging indicates that the boxes contained something substantially lighter. Furthermore, even if the Barco projectors were put on their side, despite the marking on the boxes, there would have been an overlap if four were to fit onto one layer of the pallet and four layers would have been needed to fit 16 onto a pallet. With the uneven weight distribution the load would have been very unstable with a height of 3.6 metres excluding the pallet. There was no evidence that the goods were taken off the pallets.
77. On the evidence before us the goods which were consigned by Worldspan to P&S were the same as those which were the subject of the disallowed invoice to the Appellant. Since the Appellant has not satisfied us that the goods supplied were in fact Barco and Runco projectors the appeal fails. We derive no assistance in this case from the passage at [33] in Federation of Technological Industries since the issue here was not whether there was a transaction vitiated by fraud at some other stage in the chain but whether there was on the evidence a supply giving rise to input tax.
78. The appeal is dismissed with costs to be assessed by a Taxing Master of the Supreme Court on the standard basis.
THEODORE WALLACE CHAIRMAN RELEASED: 22 June 2006

LON/04/1353

The following cases were also cited in the skeleton arguments or submissions:

Customs and Excise Commissioners v Oliver [1980] STC 73

Customs and Excise Commissioners v Peachtree Enterprise Limited [1994] STC 747

Garage Molenheide v Belgium (Case C-286/94) [1997]

INZO v Belgium (Case C-110/94) [1996] ECR I-857

Kohanzad v Customs and Excise Commissioners [1994] STC 967

Marks & Spencer PLC v Customs and Excise Commissioners (Case

C-62/00) [2002] STC 1036

Marks & Spencer v HM Revenue and Customs [2004] STC 1, CA

Marleasing SA v La Commercial Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135

R v Goodwin and Unstead (Case C-3/97) [1998] ECR I-3257

R v J Citrone [1998] EWCA Crim 3355, [1999] STC 29

Reisdorf v Finanzamt Koln-West (Case C-85/95) [1997] STC 180

Rompelman v Minister van Financiën (Case 268/83) [1985] ECR 655

Stichting Uitvoering Financiele Acties v Staatsecretaris van Financiën (Case 34/87) [1989] ECR 1737