19355
SUPPLY – whether missing trader involved in supply to the Appellant or whether Appellant acquiring goods directly from EU suppliers – the former – appeal allowed

LONDON TRIBUNAL CENTRE

	MED TRADING LIMITED	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

			Tribunal:	DR JOHN F AVERY JONES CBE (Chairman)
					PRAFUL DAVDA FCA

Sitting in public in London on 14 to 16 November 2005

Andrew Young, counsel, and Amy Berry, counsel, instructed by FSPG, chartered accountants, for the Appellant

Tim Ward, counsel, instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1.	Med Trading Limited appeals against assessments to acquisition tax of £1,312,517 made on 22 March 2002, and for reduction in input tax of £65,595.15 made on 17 December 2002.  The Appellant was represented by Mr Andrew Young and Miss Amy Berry and Customs were represented by Mr Tim Ward.
2.	The issue in this appeal is a factual one of whether computer chips were supplied to the Appellant in the UK by Long Dog Trading Limited (“Long Dog”) or whether the Appellant bought them from EU suppliers (meaning suppliers in the EU but outside the UK).
3.	We had three bundles of documents.  Thirteen witness statements were served by Customs under Rule 21 and not objected to.  In addition we heard oral evidence from Mr Khalid Hamidi of the Appellant, and there were transcripts of two interviews with him; Mr Derek Brooks, the officer in charge of the case; Mr Gary Taberer, another officer; and Mr Christopher Shields, a director of LCA International Limited, the freight forwarders concerned.  Unfortunately a number of other witnesses were summoned but did not attend.  We find the following facts, and in this paragraph in describing transactions to which Long Dog was apparently a party we are expressly at this stage not making any finding about whether it actually took part in a supply:
(1)	The Appellant was registered for VAT from 3 February 2000 as a trader in food and wine, importing wine from Morocco.  Declared sales were between £926 and £48,409 per quarter up to period 09/01.  In October 2001 Mr Hamidi joined the Appellant and entered into 18 transactions in computer chips involving the disputed supplies by Long Dog of a total £7,050,102.65 between 2 and 20 November 2001 and their resale by the Appellant.  The Appellant’s VAT return for the special period 1 October 2001 to 20 November 2001 records purchases of £7,865,141 and sales of £7,952,227.
(2)	Long Dog is a company registered for VAT on 25 June 1999 and deregistered on 6 December 2001 at 47-49 [originally 47-79 which was corrected in November 1999 following a letter from its accountants] Park Street, Luton LU1 1LY.  It gave its business activity as “new building construction” and it was concerned with a development in Woolwich.  The director and secretary was Mr Michael Damian Gearty who resigned on 22 April 2000 (director) and 5 January 2002 (secretary).  Mr Clive Harris, the company’s accountant until March 2001, records in his witness statement that Mr Gearty wanted to realise the profits of the development in the most tax-efficient way and the company was transferred to a Mr Richard Harris, which we take to mean that Mr Gearty sold the shares.  Mr Harris records that Mr Gearty told him in about December 2001 that since Mr Gearty had relinquished Long Dog he had heard that it had become involved in a fraud involving computer chips. 
(3)	Mr Hamedi wanted to expand the Appellant’s business into other areas.  After finding names in ECR magazine that he acquired in a computer store, which is a magazine used by traders in computer parts, Mr Hamedi was approached by 30 to 40 traders who gave their particulars.  He was approached out of the blue by “Mike” [surname unknown] from Long Dog by fax on 31 October 2001 saying that “We are a trading company dealing mainly in cpu’s Pentium PIIIs and Pentium P4s.”  It enclosed a copy of a certificate of incorporation for the company and a document purporting to be a VAT Registration Certificate.  Mr Brooks pointed out (and we accept) that the VAT registration number [728 55 1029) was not that of the real Long Dog, the postcode (LU1 3JX) was different from the postcode of the VAT registered Long Dog of the same address (see paragraph 3(2) above), the effective date of registration (15 September 2001) was wrong, and the trade classification (SIC92 non registered classification) was non-existent.  This fax was followed up by a phone call from Mike.  Mr Hamedi considers that, as did other traders, Long Dog found out about the Appellant by word of mouth.  Mr Hamedi’s mobile phone had two numbers stored for Mike, both of which were pay-as-you-go mobile phone numbers issued in the UK without any recorded particulars and which had been disconnected when Customs investigated them on 11 December 2001.  Mr Hamedi regarded the ring tone as a UK one.  Mr Brooks decided not to obtain particulars of calls to those numbers, which would have been a difficult exercise and one which his seniors at Customs might have not given permission for him to proceed.  
(4)	Mike would approach Mr Hamedi offering chips at a certain price and Mr Hamedi would call around to prospective buyers.  He would speak to Mike two or three times a day.  Larcom was the buyer from the Appellant in respect of 10 out of 19 transactions.  They were introduced by Mike who suggested that Mr Hamedi should telephone them.  Mike’s prices were one-half to one per cent lower than others he was offered.  The buyer would fax a purchase order and he would fax an invoice to the buyer.  He would call Mike confirming that he wanted to buy.  The buyer would ask for an inspection code, which he would normally obtain from Mike, and the buyer would approach LCA asking them to inspect the goods.  The buyer sent the money using on-line banking following the receipt of which he would pass the release code normally obtained from Mike to the buyer.  There might be a period of about five minutes between the buyer paying and having the release code.  On occasion when Mike was unavailable on either mobile phone numbers Mr Hamedi obtained the codes from “Shawn.”  A note in Mr Hamedi’s handwriting gives a telephone number for Shawn with “(Connect)” after the number; Connect Electronics is an Irish supplier.  He would then make payment, also using on-line banking to the account specified in the Long Dog invoice, which in all cases was that of the supplier to Long Dog.  Mr Hamedi accepted Mike’s statement that such third party payments were usual in this type of business.  The Long Dog invoices contain two further telephone numbers which are also mobile numbers about which we had no information and Mr Brooks could not say whether he searched them; Mr Hamedi never used these numbers.  The invoices give the address as 2 Boleyn Close, Walthamstow, E77 6QZ.  Mr Hamedi never met Mike in person.  Mr Hamedi, whose first language is Arabic considered that Mike was neither English nor Arabic but could not place his accent.  The faxes sent by Long Dog either do not have a header, or have one that does not give any telephone number.  
(5)	The Appellant’s recorded the transactions on a handwritten list on a form with headings Name of Supplier, Description, Qty, Price, Inspection Code, Release Code, Freight and Client.  In no case is Long Dog shown as supplier.  In all cases the supplier is the apparent supplier to Long Dog.  Mr Hamedi’s explanation is that he was recording where he paid the money.
(6)	The Appellant’s computer contained a spreadsheet with columns headed Purchases, subdivided into Supplier, Subtotal, VAT, Total; columns headed Sales, subdivided into Buyer, Subtotal, VAT, Total; columns headed Stock, sub-divided into No. Units and Description; and columns headed Results, subdivided into Margin, VAT, Transfer 1(3), Transfer 2 (40), Net profit.  In all cases the supplier is the apparent supplier to Long Dog.  In no case is Long Dog shown as supplier.  Neither Long Dog nor Longdog appeared on the Appellant’s computer.  Mr Hamedi’s explanation is that he was recording where he paid the money.
(7)	The Appellant provided its details, such as address, telephone and fax numbers, PIC [persons in charge?], company registration number and VAT registration number, to LCA, the freight forwarders, at their request.  Mr Shields, a director of LCA, wrote “New Account” on the fax.  LCA never invoiced the Appellant.  Mr Shields, who works in the accounts department of LCA, which is physically separate from the warehouse, said in his witness statement that the Appellant would be invoiced when worksheets were received from their logistics department.  In evidence he said (and we accept) that while the Appellant had an account there were no transactions.  Normally the person who released goods was charged.  Mr Blewett’s (another director of LCA) witness statement states (and we accept) that once authorised they conduct an inspection of the goods and give an oral report.  On completion of a sale they receive a release note from the supplier and then release the goods to the buyer.  Their dealings with the Appellant were with “Arash,” who Mr Hamidi explained was a friend helping him.  Although the receiver of goods was often given as Long Dog, LCA dealt only with the Appellant who requested inspection and are charged by LCA.  There is some conflict here and we find that the Appellant was never regarded as a customer who should be charged by LCA, otherwise they would have done so.  We also infer that so long as the inspection or release codes were quoted LCA were not much concerned about who owned the goods.  If LCA held goods for Long Dog which passed the codes to the Appellant one would expect that they dealt with the Appellant rather than Long Dog.
(8)	A print out of what are described in Mr Blewett’s witness statement as internal tracking documents from LCA’s computer show transactions including the following headings which are followed by a series of letters and figures that were not explained:
(a)	“Connect-Med-2061” [no date stated; there are transactions in 2016 pieces (for which 2061 could be a misprint) on 16 and 19 November 2001, both ultimately from Connect]
(b)	“Med-Fastmode-672-1.5 19/11/01” [on that day the Appellant’s records show a transaction involving 672 pieces from ABS to ultimately Fastmode]; 
(c)	“Longdog-Med-Larcom 1344*1.5 20.11.01” [there is a Long Dog invoice relating to 1344 pieces on 20 November 2001 which is not on the Appellant’s computer probably because 20 November 2001 was never entered before Customs took a copy of the contents of the computer]; 
(d)	“Connect-Longdog-Med-3600-001 19/11/01” [there does not appear to be any transaction in 3,600 units on that or any other date]; 
(e)	“Longdog-Med-Larcom 6900*001 16.11.01” in one place and “15.11.01” in another [there is only one transaction in 6,900 pieces, which is the one described below as the sample transaction on 2 November 2001]; 
(f)	“Med-Larcom 4500 X 1000 7/11/01” [there is a transaction involving 4,500 pieces from Abbexa to ultimately Larcom on 6 November 2001]; 
(g)	“C/E-Longdog-Med-Larcom-1008-1.5” [no date] [on the last day of trading which is undated in the Appellant’s records but follows 19 November 2001 the records show a transaction from Connect (we take C/E to be Connect Electronics) to ultimately Larcom relating to 1008 pieces].
(9)	We infer from the above that LCA’s computer records show four transactions from Long Dog to the Appellant, two of which we can identify from the Appellant’s list of transactions, one transaction which appears to correspond with the Appellant’s records in which Long Dog is not mentioned and the supply is stated to be made by Connect; and two transactions starting with the Appellant (and therefore no help in determining who supplied the Appellant) both of which we can identify from the Appellant’s records. 
(10)	By way of example of the transactions entered into: 
(a)	On 2 November 2001 Abbexa NV in Belgium invoiced Long Dog for 6,900 Intel Pentium II chips at a unit price of £130, total £900,450 including freight and insurance.  Delivery was to LCA Freight International, the freight forwarders.
(b)	On 2 November 2001 Long Dog invoiced the Appellant for the same goods at a unit price of £118 (ie considerably less than the price in the Abbexa invoice), total including VAT of £956,685.  An inspection code 3081 is given.  At the bottom of the invoice under the heading Special Instructions was the statement Please forward payment to Abbexa NV, followed by their banking details.  Such payment is for more than the invoice from Abbexa to Long Dog and includes VAT of £142,485 for which Long Dog would be liable.
(c)	On the same day the Appellant invoiced Larcom for the same goods at a unit price of £119, total including VAT of £964,792.50.
(d)	The Appellant’s bank statement shows the receipt and payment on that date.  HSBC confirmed that the receipt was from Larcom and the payment to Abbexa.  The Bank identified the user of the computer banking as Mr Hamedi. 
(e)	The Appellant’s form recording the transactions and its spreadsheet (see paragraphs 3(5) and 3(6)) is completed with Abbexa NV as the supplier.  
(f)	We do not have LCA’s documents for these particular transactions but we have documents for some later transactions relating to different suppliers.  A fax of 16 November 2001 from Nightline [Air Express Worldwide] to LCA headed “Inspection Only” shows the name of the supplier (there Connect Electronics, an Irish company).  It goes on to state: “Please allow the following inspections: Long Dog Trading to inspect [three items are specified] including 6,300 (altered in manuscript from 6,200) pcs P3’s – Code 211,” followed in capitals by “Do not release these goods for the moment.”  A consignment note shows Connect Electronics Limited with an Irish address as sender and Long Dog as receiver c/o LCA Int’l.  On the bottom is written Connect [underlined] 6,300 pcs to Long Dog R/N PFE9, which we understand to be the release code.  Air waybills by British Midland were provided for a number of transactions that day showing the shipper as Nightline and the consignee as “LCA Intl.”  We also saw CMR documents for 6 November 2001 showing goods from Abbexa NV to LCA International described as 5 cartons of computer parts.  Another consignment note dated 14 November 2001 shows the same sender and receiver and on the bottom is written “Connect [underlined] 7,200 pcs to Long Dog Trading R/N 8237.  Will probably be collected by Larcom.  These are the 7,200 that was inspected under SHFDE.”  This inspection code can be seen on a fax from Nightline of the same date which is amended in manuscript to include the words “Inspection.  7,200—Long Dog Trading–SHFDE.  Mr Shields explained that when goods were released to Long Dog, Nightline would be charged by LCA. We did not see transactions on these dates relating either to 6,300 or 7,200 pieces in the Appellant’s records.
(11)	We infer that other suppliers invoiced Long Dog in the same way as Abbexa, and that that similar freight documents as described in relation to supplies by Connect existed in relation to the Abbexa transactions.
(12)	A fax dated 6 November 2001 was referred to.  It is addressed “Dear Sir” and states:
“This is to advise you that we have not yet received the fund (sic) into our account as per your confirmation of today.  The transaction was transmitted on 06/11/01 at 12:33.58.  Allowing for normal bank procedure, by 13:30.00 we should be transferring the sum of 576,337.50 pounds sterling into your nominated account.”
The first sentence seems to be written to a buyer, and the second to Long Dog.  Mr Hamedi was unable to explain this.  The figure quoted corresponds to the transaction in the Appellant’s records for that date.
(13)	Long Dog invoices to the Appellant are numbered 521, 530, 532, 540, 544, 559, 570, 577, 579, 583, 585, 589, 595, 599, 603, 605, 607.  This suggests that Long Dog was doing other business but Mr Brooks said that he knew of cases where non-consecutive invoicing was used to suggest that the seller was doing more business that it was.  We infer from the fact that Long Dog directed payment of a greater sum than was due to it in the particular transaction to Abbexa, and from the freight documents naming Long Dog in relation to numbers of pieces not contained in the Appellant’s records, that Long Dog was doing other business as suggested by the invoiced numbering.
(14)	When officer Taberer visited Long Dog’s premises recorded in its VAT records at 47-49 Park Street, Luton on 15 November 2001 he found another company there but was told that post had been received for Long Dog during the past two and a half years which he put in the adjoining office rented by AAA Transport of which the owner was Mick Gearty.  Michael Gearty is recorded at Companies House as secretary of AAA transport Services Limited.  At the time Mr Taberer picked up an (undated) invoice handwritten on a printed form reference 04-2001 from ABS Im- und Exportgesellschaft mbH, with a German address, to Long Dog addressed to 47-49 Park Street Luton LU1 3JX (the same post code on the suspect VAT registration certificate) relating to 672 pieces of P[entium]4s 1.5 Giga Hz at £128.50 which corresponds in price, number and description to an item in the Appellant’s records for 19 November 2001 (see paragraph 3(8)(b) above).  We noted when writing this decision a discrepancy in the dating between a transaction recorded by the Appellant on 19 November 2001 and an invoice that Mr Taberer picked up on 15 November and was told was “received recently” at Long Dog’s premises.  This was not pointed out by Customs and no explanation was given. It is also surprising that the invoice was sent to Long Dog at the address in Luton when its address on its invoices is in Walthamstow.
(15)	Customs suspected fraud by the Appellant and obtained a freezing order in respect of the Appellant’s bank account.  No claims have since been received for the money frozen in the account.  Mr Hamidi was arrested and interviewed, and searches were made of the Appellant’s premises on 21 November 2001.  We understand that he was not prosecuted.
(16)	Customs assessed Long Dog in respect of the transactions the subject of this appeal on 11 February 2002 and 9 July 2002, inhibiting the misdeclaration penalty with a statement on the VAT 643 that a civil evasion penalty was being considered.  Mr Brooks asked for these assessments to be cancelled and undertook that if this had not already been done, it would be.  
(17)	Customs assessed the Appellant for acquisitions tax of £1,312,517 on 22 March 2002 and made a further assessment in consequence reducing input tax of £65,595.15.
4.	Mr Young contends that the Appellant bought computer chips from Long Dog Trading Company Limited (“Long Dog”) over a period from 2 to 20 November 2001 on which input tax is recoverable in the usual way.  Mr Ward, for Customs, contends that the Appellant did not do so but bought the computer chips directly from EU suppliers and is accordingly liable to acquisitions tax.  He expressly disclaims making any allegations of fraud now (as opposed to the time of the interviews with Mr Hamedi) against either the Appellant or Long Dog.
5.	Looking at the evidence as a whole it seems likely that someone has hijacked the name of Long Dog.  There is no evidence to suggest that the Long Dog involved in the transactions with the Appellant is connected with the real Long Dog which was involved with a property development.  The only evidence about Mr Gearty is Mr Harris’s (his former accountant) evidence which is favourable to him in that Mr Gearty told Mr Harris that since selling Long Dog he had heard that it had become involved in a fraud involving computer chips.  It is highly unlikely that if Mr Gearty had himself been involved in the fraud and was a missing trader, that he would have told his former accountant that Long Dog has been involved in a fraud.  Taking the sample transactions on 2 November 2001 as an example, by buying from Abbexa at £130.50 per unit and selling to the Appellant at £118 per unit and requiring payment by the Appellant of the whole consideration to Abbexa which, with VAT for which Long Dog is liable, is larger than the consideration charged by Abbexa, we infer that Long Dog was involved in evading VAT in what seems to be a typical Missing Trader Intra-Community fraud of VAT washing, as Mr Brooks called it.  In making this finding we expressly state that no such finding is being made against the original Long Dog and in particular its director Mr Gearty.  It is much more likely that the Long Dog involved in the transactions the subject of this appeal has no connection with the real Long Dog.
6.	 The main possibilities are that either Long Dog never made any supplies to the Appellant and is just a name used by someone, possibly someone outside the UK or possibly Mr Hamedi in order to disguise that in reality supplies were made from EU suppliers to the Appellant; or alternatively that Long Dog did make the supplies and has disappeared without paying the VAT on those supplies, which it never intended to pay.  Having heard Mr Hamedi we do not find that he invented Long Dog in order to cover up that the Appellant acquired goods direct from EU suppliers.  Nor is there any evidence that Long Dog was someone outside the UK, although we accept that it would be possible for it to have used mobile phones registered in the UK from say Ireland.  Customs could possibly have provided evidence that Long Dog was operating from outside the UK by obtaining details of the phone calls from Mike’s two mobile numbers but Mr Brooks decided not to try to obtain these.  The postal address on its invoices of Walthamstow E77 might suggest involvement by someone from outside the UK because a UK person would surely know that E17 was more likely.  But this is insufficient for us to find that it operated from outside the UK contrary to the invoice address.
7.	Mr Ward pointed to a number of suspicious circumstances, such as the third-party payments, Long Dog not appearing in the Appellant’s records, the obviously wrong postcode on Long Dog’s invoices, the use of mobile pay-as-you-go numbers without recorded particulars, and the unlikelihood of anyone entering into transactions requiring payment to the ultimate supplier, or paying money before obtaining the release code for the goods, that LCA did not regard itself as dealing with Long Dog and the unexplained fax of 6 November 2001 (see paragraph 3(12)).  We have already inferred that Long Dog was evading VAT and intending to disappear, and not surprisingly was covering its tracks.  It is also not surprising that it was willing to act seemingly uncommercially by giving details of its suppliers and even allowing Mr Hamedi to contact them (in the person of “Shawn”) directly, thus risking the possibility of the Appellant cutting it out of future transactions.  But it should be remembered that, although this would not have been known to the Appellant, Abbexa was apparently supplying goods to Long Dog at a higher price than the Appellant was paying and so Long Dog was not actually running any risk of being cut out.  Long Dog was involved in MTIC fraud, not normal commercial transactions.  But the real question is whether before disappearing Long Dog did take part in making supplies to the Appellant.  Transactions where the Appellant had to put up no funds and buyers pay money in advance of obtaining release codes do seem uncommercial but in the course of carousel frauds these Tribunals has seen such transactions entered into by seemingly innocent parties (buffer companies), including many examples of third party payments.  If Customs wanted to say that they were unusual they should have produced evidence to that effect.
8.	In determining whether Long Dog made supplies we give more weight to information not coming from Long Dog or the Appellant.  In this category we have nine invoices from Abbexa to Long Dog, 12 inspection documents permitting Long Dog to inspect (meaning, we understand, to ask LCA to inspect on their behalf) saying “do not release these goods for the moment,” which suggests is likely to be followed by a release to Long Dog, and 9 consignment notes mentioning Long Dog (plus another where Long Dog has been crossed out and Larcom substituted).  We regard the Abbexa invoices as particularly important.  We assume that Abbexa is a large supplier of chips.  Mr Brooks said that he was aware that Abbexa in Luxembourg (which may be a mistake for Belgium) was a supplier of computer CPUs to businesses in the UK that had defaulted in their VAT liability.  We do not read this as suggesting that he had evidence of impropriety against Abbexa, but merely a statement of fact that it was such as supplier of chips, which is not surprising because those involved in MTIC fraud would need to obtain chips from respectable suppliers.  Mr Brooks apparently accepted in cross-examination that Long Dog made supplies to the Appellant, but we do not regard this as conclusive.  We infer that Abbexa would not invoice chips to Long Dog at a UK address without having some knowledge of Long Dog and some security that it would be paid.  It is one thing for Customs to say that they suspect there to be an improper relationship between Long Dog and the Appellant, but it is quite another to ask us to ignore an invoice from a respectable supplier to Long Dog.  Customs would have been able to obtain information through EU exchange of information provisions about transactions by Abbexa (and other EU suppliers) with Long Dog but they did not do so.  Mr Ward criticised the Appellant for not providing any evidence but we are sure that it would have been pointless for them to approach Abbexa (and the other EU suppliers) for information about supplies to a third party and competitor, Long Dog.  In all the circumstances, we take these invoices at face value and consider that they are strong evidence of a supply by Abbexa (and we have inferred, by other EU suppliers) to Long Dog and consequently of Long Dog making supplies to the Appellant.  LCA’s records showing that at least in some cases there were records of transactions between Long Dog and the Appellant supports this, although we have inferred that a freight forwarder is not particularly concerned about the identity of the participants in transactions so long as the right release codes are quoted.  We are less concerned with the Appellant’s internal records, although we agree that it is strange that Long Dog should not be recorded anywhere.  We accept that the Appellant was recording where the money went perhaps as if Long Dog were an agent.  The unexplained fax of 6 November 2001 is suspicious but on its own we do not think that it indicates that the transactions were artificial in that there was some connection between the buyer from the Appellant and Long Dog.
9.	We also consider that if Customs were right that EU suppliers had made supplies to the Appellant the assessment should be based on the price invoiced by the supplier, such as Abbexa, and not the price that Long Dog (treated as non-existent on this basis) directed the Appellant to pay to the supplier.  In the sample transaction on 2 November 2001 Abbexa invoiced £900,450 to Long Dog, and Long Dog directed the Appellant to pay £956,685 to Abbexa.  The assessment is based on the latter figure.  This payment instruction coupled with the invoice numbering and the evidence of freight documents not involving transactions with the Appellant, suggest to us that Long Dog was making other purchases which in turn Long Dog was supplying to others and not paying the VAT.  Had we agreed with Customs contentions that the EU suppliers had supplied the Appellant we would have reduced the assessment accordingly, although we do not have the information about the price that other suppliers charged to Long Dog.  As it is we consider that this inconsistency is a further reason for finding against Customs’ contention.
10.	Mr Hamedi’s evidence to the tribunal and in his interviews was extremely consistent; Mr Young point out that the only inconsistency was that in the interviews Mr Hamedi considered that the Appellant was acting as an agent taking a commission, which is a point of legal interpretation rather than an inconsistency in the facts.  Mr Hamedi seemed to us to be reasonably sophisticated in business matters and one might have expected that he would have been suspicious of offers of quick profits without putting up any money, but we find that he accepted everything Mike told him of a business about which Mr Hamedi knew nothing.  At the end of the day we consider that the fraudulent Long Dog found in the Appellant just what it was looking for, an innocent person who was just starting in computer trading and knew nothing of the industry, which enabled it to use the Appellant in furthering its MTIC fraud by inserting the Appellant in transactions and thereby distancing itself from other persons in the chain.  We would not be surprised if the transactions we have seen were part of carousel frauds with the chips ultimately going back to the supplier, but there is no evidence of this and accordingly we do not find that the transactions were not commercial on this basis.  
11.	Accordingly, we find that Long Dog took part in the supplies in accordance with the invoicing and allow the appeal.  Mr Young asked for costs.  Mr Ward said that if we found in favour of the Appellant he wanted to make representations about costs, which we direct Customs to make in writing to the Tribunal and the Appellant within 21 days of the date of release of this decision, to which the Appellant may reply within a further 7 days, following which any award of costs in principle will be determined.

JOHN F AVERY JONES

CHAIRMAN
RELEASE DATE: 29 November 2005

LON/02/0481

££Med Trading Ltd v Revenue and Customs [2005] UKVAT V19355 (29 November 2005)