back to article Brit reseller Aria PC mounts appeal against £750k taxman VAT fiddle ruling

Computer parts reseller Aria Technology, which trades as Aria PC, is appealing against a ruling that it defrauded the UK taxman out of £750,000 of VAT. The Tax Chamber of the First-Tier Tribunal (FTT) ruled in 2016 that Aria Taheri, the Manchester-based firm’s sole director, “must have known of the connection to fraud” when …

  1. Steve K Silver badge

    Ignorance of the law is not a defence...

    Aria has also argued that Taheri did not know enough about the deals to realise they were fraudulent, as well as asserting that he did not know what MTIC fraud was and therefore did not recognise the warning signs in his firm's suppliers

    On this point I suspect that he will find that ignorance of the law is not a defence (i.e. that's why you have an external VAT Accountant if you don't have a qualified Finance Director/Controller in-house).

    1. This post has been deleted by a moderator

      1. K Silver badge

        Re: Ignorance of the law is not a defence...

        "A dishonest businessman"

        Weigh up the facts before you start labelling somebody that..

        A lot of businesses rely upon some form of tax-minimisation to reduce their prices and to boost their profit (Actually, virtually every gambling company has some presence in Gibraltar for this very purpose).

        I won't defend these practises, but I think the government is picking on the little man here who they see as an easy target - We're yet to see them apply these tactics (i.e. going after them) to the mega-corporations, where surely it would have more impact. On the same note, how are these smaller companies meant to compete with the likes of Amazon etc when they are allowed to get away with it?

        As for dishonest - i will say this, I've only purchased once from Aria, but from my dealings, they are about the most honest supplier I could find recently. In March, I wanted a GTX 1080, every other reseller was taking the p*ss by using the excuse of "shortages" to push up prices, retailing what should cost £500 for about £700.. Aria was the only place that was selling them for close to the MRRP.

        1. John Brown (no body) Silver badge

          Re: Ignorance of the law is not a defence...

          "I won't defend these practises, but I think the government is picking on the little man here who they see as an easy target - We're yet to see them apply these tactics (i.e. going after them) to the mega-corporations, where surely it would have more impact."

          Or they are going after the little fishes to set a precedent for later going after the bigger fish.

    2. katrinab Silver badge

      Re: Ignorance of the law is not a defence...

      He's not claiming ignorance of the law. He is claiming that his ignorance is evidence of lack of intent; and intent is required for most criminal offences.

      Essentially he is claiming that he is an innocent victim who was conned into getting involved in these fraudulent claims.

    3. Anonymous Coward
      Anonymous Coward

      Re: Just for you...

      If I ever get to pass a law, it will be "That Steve K should do 10 jumping jacks each morning", but I'll not tell you for 3 days... should be enough to confirm you certainly were breaking the law...

      ... however, I do realise you mean willful ignorance in this case, as the business no doubt could check the law and also pay accountants and solicitors.

      1. Hey Nonny Nonny Mouse

        Re: Just for you...

        "If I ever get to pass a law, it will be "That Steve K should do 10 jumping jacks each morning", but I'll not tell you for 3 days..."

        A secret law is not really a reasonable comparison though, none of the law that Taheri is accused of breaking was or is secret so there's no excuse for ignorance or incompetence, it's his responsibility to ensure he and his company obeys those laws.

        Just as ignorance is no defence, if he or his people didn't know about the very well known Carousel fraud and the MTIC variant they're about to find out that incompetence is no defence either.

        1. Anonymous Coward
          Anonymous Coward

          Re: Hey Nonny Nonny Mouse

          Which is why I stated it is *not* a comparison!

    4. Aqua Marina

      Re: Ignorance of the law is not a defence...

      As much as HMRC would not like this to be known, HMRC whilst an agency of government, it is not a court of law. Only a court can determine if the law has been broken.

      The situation Aria finds itself in now, is that HMRC has determined that tax is due. This is it's purpose, it is the collector of tax. HMRCs determination however has no more legal standing than an opinion. It is a very highly regarded opinion within government, but it is still simply an opinion. If HMRC wishes to enforce it's determination, it must get a court order to do so, i.e. Aria must stand trial in court for tax evasion.

      At this point in time today Aria is innocent of all charges (because there are non legally brought yet), and HMRC is simply following HMRC procedure that in theory is supposed to save the courts time.

      At some point HMRC having exhausted all other avenues of revenue collection will take Aria to court. Up until this happens, the burden of proof at each stage of HMRC process is upon Aria to prove it's innocence. Again I'll say that HMRC is not a court, so the normal burden of proof such as innocent unless proven guilty is irrelevant at this point.

      Once a court case is brought, the burden of proof changes. HMRC has lost many VAT carousel cases simply because it cannot prove beyond a reasonable doubt, that the defendant wilfully committed tax fraud. By law, the burden of proof is placed upon HMRC to prove it's case, not Aria to prove it's innocence. However, if Aria accepts HMRCs determination before a court case, and pays the bill. It cannot appeal later regardless of truth.

      I believe that El Reg is misleading the average-Joe reader via carefully crafted headlines into believing Aria is committing tax fraud. At most El Reg's actions have successfully resulted in a situation that non-criminal tribunal cases (i.e. procedural cases that if contested eventually lead up to a true court case) should be performed openly and not secretively and can be reported about.

      I could go on for another few pages but instead:- TLDR. Aria are at another step in a long line of HMRC processes designed to get them to part with their cash prior to an actual criminal court case, in much the same way that dodgy debt collectors persue you relentlessly, constantly hoping you pay before a court says you don't have to.

      Oh and at some point, a court decide that this process should be open to public scrutiny, and El Reg have taken credit. When did El Reg move to San Francisco?

      1. Aqua Marina

        Re: Ignorance of the law is not a defence...

        I’ve partly changed my mind on the above, but only because I’ve spent the last 2 hours reading up on the workings of the First Tier Tribunal. It looks like right to trial by a jury of your peers has been abandoned for tax cases. I think that there is sufficient case for Aria to appeal due to the tribunal being incorrect on a point of law, but, I feel that only companies or persons with large enough pockets could afford to go down this route.

        TLDR: the law it appears has been changed in favour of HMRC process because it appears the courts are too dumb to understand all these complex tax rules, and heck, HMRC must know what it is doing because it makes the rules, so simples!

      2. Red Bren
        Trollface

        Re: Ignorance of the law is not a defence...

        "HMRCs determination however has no more legal standing than an opinion. It is a very highly regarded opinion within government, but it is still simply an opinion."

        The level of regard given to HMRC's determination by the government is inversely proportional to the wealth of the the individual/corporation involved. Tax is for the little people who can't avoid it, justice is for those who can afford it.

      3. katrinab Silver badge

        Re: Ignorance of the law is not a defence...

        You are confusing two things here.

        The tax tribunal will determine whether or not the tax is due.

        The crown court will determine whether or not tax evasion has taken place.

        It is possible, and very common, for the tax tribunal to decide that the tax is due in situations where tax evasion has not taken place. Harry Redknapp is one example. He didn't evade tax by hiding money in an offshore account in Monaco, but he did have an underpayment of tax that he had to pay.

  2. Daedalus Silver badge

    Did you ever notice...

    ...that almost everything we got from the EEC/EU has been the target of shell games and other shenanigans? VAT claim-backs, ships docking only long enough to tie up, untie and head back, to avoid some arcane customs rule at great profit...

    Maybe the real problem is that these rules, laws and taxes are basically not fit for purpose. Maybe the problem is that utopian meddlers conceived these things without regard for the true nature of people, or just sat back and said, "Well, it might take a bureaucratic police state to make it work, but we have plenty of experience with that."

    1. Jason Bloomberg Silver badge

      Re: Did you ever notice...

      Maybe the real problem is that these rules, laws and taxes are basically not fit for purpose.

      And you are probably right. These kind of scams have been going on forever, happen whenever someone spots a loophole or sees something to exploit.

      I don't know why you single out the EEC/EU. Though I could make a guess.

    2. katrinab Silver badge

      Re: Did you ever notice...

      I think you will find there is a lot more dodgy stuff involving Crown Dependencies, British Overseas Territories, and Scotland[1].

      [1]Scottish Limited Partnerships. Scotland is now the only country in the world where you can own a business structure that is completely anonymous. While the law that allows this only applies to Scotland, it is the responsibility of the Westminster Government, not the Scottish Government.

      1. Alan Brown Silver badge

        Re: Did you ever notice...

        "I think you will find there is a lot more dodgy stuff involving Crown Dependencies, British Overseas Territories, and Scotland"

        You don't even need to go that far away from the government.

        The City of London is THE money laundering capital of the world according to mafia/organised crime experts and has been for a long time. It's not a coincidence that all those russian oligarchs with dodgy fortunes seek it out as a safe haven.

    3. Avatar of They
      Meh

      Re: Did you ever notice...

      You one of these people that think Brexit will fix all our woes, that the UK failing tax system will somehow magically bounce back? Lol.

      HMRC are being halved like everyone else so won't get any better when we leave the EU.

  3. Anonymous Coward
    Anonymous Coward

    When dealing with HMRC I'm reminded of Paulie from Goodfellas:

    But now the guy's gotta come up with Paulie's money every week, no matter what. Business bad? "Fuck you, pay me." Oh, you had a fire? "Fuck you, pay me." Place got hit by lightning, huh? "Fuck you, pay me."

    Never think you are a better gangster than HMRC.

    1. Chris G Silver badge

      "Never think you are a better gangster than HMRC."

      A gangster that in many ways writes it's own laws, Al Capone owned judges and cops, HMRC often are the judges and cops.

      They review their own powers and can, by quoting the right part of their powers of entry, force entry to seize documents, evidence or goods.

      HM REVENUE & CUSTOMS

      REPORT ON OUR POWERS OF ENTRY

      November 2014

      1. Red Bren
        Pirate

        "A gangster that in many ways writes it's own laws, Al Capone owned judges and cops, HMRC often are the judges and cops."

        And PwC/KPMG/EY/Deloitte have a revolving door into HMRC. The people writing tax law today, will tomorrow be advising their clients where the loopholes are.

    2. cb7

      A gangster with a broken system

      "Never think you are a better gangster than HMRC"

      I think their system is borked.

      It's scary to think how dangerous a gangster with a broken system is!

      1. I submitted an amendment to my previous year's tax return. Even received an acknowledgement and reference number for the submission.

      Their agents on the phone later acknowledged they had received the amendment and I had to speak to a "Tech agent" about it.

      5 months later I get a letter from them saying they've got no record of the amendment and I have to submit a letter of appeal.

      Wtf

      2. I receive a 2nd letter saying they'd received my appeal for a late tax return but they can't process the appeal as they haven't received the tax return. a) I never appealed as b) I submitted my tax return months ago.

      I'm recovering from a heart op. I could really do without all this shit.

      Still, I guess some poor fucker has to pay for the gold plated toilet roll holders in their toilets.

      1. Alan Brown Silver badge

        Re: A gangster with a broken system

        "Their agents on the phone"

        Rule #1 in dealing with any tax authority: If it's not in writing, it never happened.

        If you _must_ deal with them in person or on the phone: Record the interactions and transcribe them immediately. Even better if it's in-person, write it up on the spot and ask the HMRC staffer to sign off on it as a true and accurate record.

  4. Roj Blake Silver badge

    Aria's Big Mistake...

    ...was to not be a Conservative minister.

    That way, he could have put it down to an administrative oversight and no more would be said about the matter.

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