Rod Stone was a leading investigator and VAT compliance expert at HMRC for 40 years. His greatest achievement was developing the "abuse of right" or "knowledge" principle to combat MTIC VAT fraud following a 2005 case. He oversaw its implementation, conducted over 1,200 witness statements and testified in over 100 trials. This led to HMRC denying over £3.2 billion in VAT input tax claims and reducing MTIC fraud by £3.5 billion annually. He has since joined 4 Eyes Tax Solutions to work with clients on supply chain integrity and preventing financial crimes.

1. Published on Tax Journal (http://www.taxjournal.com/tj)
Home > One minute with...Rod Stone OBE
One minute with...Rod Stone OBE
Thu, 02/07/2015 - 12:01 -- Stefan Black
You were at HMRC for 40 years as a leading investigator and VAT compliance
expert. What would you consider to be your greatest achievement during this
time?
Following the opinion of the Advocate General published in 2005 in
Optigen Ltd, missing trader intra-Community (MTIC) fraud increased to
an unprecedented level and threatened to impact the UK economy.
Previous attempts by HMRC to stem losses had floundered. A new
strategy was urgently required. Building upon the principles developed
by the CJEU in Halifax, BUPA and Huddersfield University, I
developed the ‘abuse of right’ or ‘knowledge’ principle to combat VAT
fraud.
I oversaw the implementation of HMRC’s ‘knowledge project’ to ensure it did not lose
momentum, made in excess of 1,200 witness statements and gave evidence in more
than 100 tribunal appeals and 80 criminal trials. The application of the ‘knowledge
principle’ to combat VAT fraud was confirmed by the CJEU in Kittel. Since 2006,
HMRC has denied VAT input tax claims in excess of £3.2bn and reduced MTIC fraud
by £3.5bn a year.
You’ve recently joined 4 Eyes Ltd Tax Solutions. What is on your ‘to do’ list?
My former role in HMRC policy and enforcement, gave me unparalleled insight into
indirect tax, financial crime and money laundering. Together with my colleagues, I want
to work with clients to ensure the absolute integrity of supply chains.
It is imperative that clients ensure supply chain integrity. The requisite tests are
applicable to all supply chains involving both intangible and tangible commodities and
are not confined to tax matters, encompassing most types of financial crime and
money laundering.
Comment on a topical issue in VAT.
Insolvency action is now used by HMRC to recover lost VAT. The decision of the
Supreme Court in the matter of Jetivia SA and another (Appellants) v Bilta (UK) Limited
(in Liquidation) (respondents) which concerned MTIC fraud in the carbon trading
market, upholds this approach. Given recent HMRC successes and continued judicial
support, I expect to see further development in this area.
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2. What do you regard as the high point of your career?
When I was awarded the OBE in the 2012 New Year Honours for services to tax
investigation. This honour could not have been achieved without the support of my
colleague investigators who investigated the individual cases.
Aside from your immediate colleagues, whom in tax do you most admire?
I most admire Sir Alan Moses, former Lord Justice of Appeal and now chairman of the
Independent Press Standards Organisation. His judgment in Teleos PLC had a
significant impact on the development of ‘knowledge’ cases. His subsequent judgment
in Mobilx Ltd upheld the use of the principle and the manner in which such frauds are
investigated.
Looking back on your career to date, what key lesson have your learned?
To keep arguments simple, assume nothing and to ensure that all lines of enquiry are
properly investigated. Not doing so will generally result in an adverse decision.
Tell us a secret.
I am a lifelong West Ham fan and season ticket holder. At each home game, I join the
other 35,000 armchair managers and employ my experience to select the team, talk
tactics and right wrongs.
Author(s):
Rod Stone [1]
Tax type:
One minute with [2]
Source URL: http://www.taxjournal.com/tj/articles/one-minute-withrod-stone-obe-02072015
Links:
[1] http://www.taxjournal.com/tj/content/rod-stone
[2] http://www.taxjournal.com/tj/category/tax-type/one-minute
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