Gas station owner loses legal challenge over VAT bill

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A gas station owner lost his appeal to the High Court against a decision by the tax authorities not allowing him to offset VAT in excess of € 450,000 because it was linked to false fuel bills.

Judge Michael Twomey dismissed a lawsuit brought by Fergus Byrne, who operates two convenience stores and gas stations in Co Offaly, against a Tax Appeals Commission (TAC) ruling that upheld Revenue’s tax assessment.

The court heard that Mr Byrne had purchased fuel worth around 2.5 million euros from three different companies over a three-year period, on which he had paid VAT of 451,770 euros.

However, no VAT has ever been recorded by these companies with the tax authorities in relation to the invoices concerned.

Lawyers for Mr Byrne have argued that the TAC erred in law in concluding that Mr Byrne was not entitled to set off VAT.

They argued that no reasonable commissioner could have drawn the same conclusion that Mr Byrne should have known about the VAT fraud.

Justice Twomey disagreed due to cumulative evidence before the TAC, including a triangular payment agreement whereby Mr. Byrne received fuel and invoices from one supplier but paid another company.

The judge noted that Mr Byrne had struck a deal that was not normal in an industry he knew to have a “high profile degree of fraud / crime”.

He observed that Mr Byrne was concerned enough about the diesel he had purchased to send in samples for scientific testing to verify if it was bleached fuel.

“Alarm tones”

Judge Twomey said the arrangement “should sound the alarm bells” for any businessman.

“The alarm bells should be louder when dealing with very large sums of money,” added the judge.

Justice Twomey said a reasonable commissioner could conclude that the only reasonable explanation for the purchases was that they were related to VAT fraud.

He acknowledged that another commissioner might have come to a different conclusion, but stressed that this did not mean that the TAC in this case had erred on a point of law.

The court heard the matter came to light after Mr Byrne, who had worked at gas stations since 2000, was audited by the tax authorities in April 2013.

The tax authorities determined that invoices valued at € 12,432 in 2010, € 190,356 in 2011 and € 248,982 in 2012 were false.

The High Court heard that Mr Byrne admitted at a TAC hearing that the triangular payment arrangement was “unusual”.

Mr Byrne told the TAC he had no doubt accepted that it was “just a deal between two companies that this is how they want their business to be conducted”.

He said he was approached by an agent for a fuel supplier in 2010 who claimed he had a deal with another company that he knew was related to one of the largest suppliers of fuel of the country, to obtain lower prices.

Advance payments

Mr Byrne said he believed he would have been required to make upfront payments and would not be able to benefit from cheaper fuel if he had ordered fuel directly from the second company.

The businessman said he became concerned enough about the arrangement in 2012 to insist that the invoices came from the second company in the future.

Mr Byrne said he had only ever dealt with agents and had never contacted either company directly.

However, he disagreed that the triangular payment arrangement, the lower price offer and the fact that the delivery trucks did not have the supplier’s livery should have alerted him to the fraud. In progress.

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