Cantor Fitzgerald Should have Known its Transactions Were Connected with Fraud
Howard Watkinson and Joshua Carey, led by James Puzey, were instructed by HM Revenue in Customs in Tower Bridge GP Limited -v- The Commissioners for HM Revenue and Customs  UKFTT 176 (TC), the most high profile civil MTIC fraud case to date.
Tower Bridge GP Limited is the VAT Group Representative for Cantor Fitzgerald Group, which serves more than 7,000 institutional clients around the world and is recognised for its strengths in equity and fixed capital markets, investment banking, prime brokerage, commercial real estate finance and for its global distribution platform. It is also a leaderin new businesses and marketplaces including e-commerce and other ventures. One of the leading middle market investment banks, Cantor Fitzgerald & Co. is one of 22 primary dealers authorised to trade U.S. government securities with The Federal Reserve Bank of New York.
This case centred around transactions that were undertaken in 2009 in the carbon credit industry. HMRC’s primary case was that the Appellant knew or should have known its transactions were connected with the fraudulent evasion of VAT. The value of the VAT at stake ran to just over £7M for VAT periods 06/09 and 09/09. The appeal also touched on whether the invoices that input tax was reclaimed on were “invalid” as well as assessment time limits.
In what must be one of the longest judgments ever produced by the Tribunal (2092 paragraphs) it found that the Appellant should have known that the majority of its transactions were connected with the fraudulent evasion of VAT. It found that HMRC had assessed in time for one of the two periods under appeal.
In a particularly telling passage, the Judge found that:
“…the fraudsters knew that CFE would trade with anyone with a certificate of incorporation, not investigate or conduct effective enhanced due diligence into transactions that appeared extraordinary, make insufficient enquiries if any of the companies they were using to facilitate the fraud and would be unlikely to report any suspicions to the authorities.”
The judgment was reported in The Times in an article entitled “Cantor Fitzgerald aided VAT fraudsters” which can be found at this link.
Howard and Joshua continue to deal with high profile tax and financial wrongdoing cases in both the civil and criminal courts and tribunals, representing both government authorities, individuals and companies.