Reasonable requirement

The claimants sold mobile telephones to a Spanish company TT for sale in Spain or France. The claimants were required to deliver the goods to a warehouse in the UK which belonged to TT's forwarding agent who was supposed to arrange their onward journey. TT sent the claimants a stamped and signed dispatch note a few days after each transaction.

The goods were initially believed to qualify for zero rating as applies to goods being exported from the UK to another Member State (VATA 1994 s 30(8)). However it was subsequently found that the details on the dispatch notes were false and HMRC made retrospective assessments on the claimants on the ground that the goods had never left the UK.

The claimants appealed to the High Court which found in brief that the claimants could not have known that any fraud...