The taxpayer (TFS) had a single director who moved to England from Turkey in 2007. He had a ‘long standing relationship of trust’ with the directors of a Turkish-based supplier of water called Vitan. The issue was whether the imported value of water into the UK should be based on payments made by TFS to Vitan or the value of the bottled water imported into the UK. The payments of £718 000 exceeded the declared import value by £606 609 for the period under review.
The TFS director claimed that the advance payments were made to ‘secure a supply of bottled water at a better price than would otherwise have been available’. This was particularly relevant in Turkey because of its high inflation rate between 2017 and 2019 the period in dispute.
HMRC asked why the company’s account balance with Vitan was in credit by £2.7m on...
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