Customs & Excise may have to soften its line on EU exporters following an important victory by a company at a VAT tribunal. Bristol-based Harriet's House, a soft furnishings business, challenged Customs over the stance it took when asking for evidence of exports to other EU countries. Officials said that certain documents, such as the certificates of shipment, were not available for inspection within three months of goods being removed from the UK, free of VAT. While waiting for the additional paperwork, they levied VAT on the export. Although this was removed once Customs had the extra documents, nearly £50,000 worth of interest charges had built up for which the company is liable. Interest charges cannot be appealed against. Accountants Pannell Kerr Forster, acting for Harriet's House, demonstrated there was 'abundant alternative evidence available' to prove the goods had been dispatched from the UK and that Customs had deliberately ignored this evidence when making the assessment that led to the interest charge. Tim Buss, senior VAT consultant at Pannell Kerr Forster, said: 'This case clearly demonstrates how Customs takes an unnecessarily hard line in insisting upon sight of specific documents when they have no reason to doubt the authenticity of the transaction.' He added: 'Their own guidelines allow for other documents to be considered as valid proof of dispatch but Customs systematically ignored this.' Buss said he was sympathetic to Customs if an exporter just had a goods invoice but in this case even though there was a 'whole package of documentation' it would not accept it. In any case, he said a certificate of shipment was a cost to business since it had to pay around £40 to £50 to get one. Stephen Billycald, managing director of Harriet's House, said: 'We're delighted common sense has prevailed in the face of bureaucratic red tape. We hope other companies will be encouraged by our victory and be willing to challenge over-zealous application of the rules.' A spokesman for Customs said the department was considering the case and may decide to appeal. But he continued that he these cases would not become a common occurrence and that the case would not set a precendent to others in the future.
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