There are times when a witness may wish to give evidence but have his or her anonymity preserved. A recent case shows the willingness of the VAT Tribunal to hear such witnesses and provide for anonymity when appropriate.

 

The case involved an escort agency, which charged fees to clients for introducing them to escorts. There was no disagreement that the introductory fees were subject to VAT, but HM Revenue and Customs (HMRC) sought to assess the agency for VAT on the basis that it was providing, as principal, the full range of services that were subsequently provided by the escorts. Those services were separately negotiated between the escorts and their clients. HMRC regarded them as being supplied by the agency and claimed nearly £100,000 in VAT and interest.

 

The agency produced in evidence a statement by a woman known as ‘Caroline’ or ‘Miss X’, who would not allow her real name and address to be disclosed. HMRC opposed this and asked the Tribunal to give its reasons for agreeing to accept her evidence. The Tribunal concluded that it was ‘self evident to us that the reasons why Miss X wished to remain anonymous had nothing whatever to do with VAT’.

 

The other interesting feature of this case was that there was a rather complex and inconsistent ‘contract’ between the escorts and the agency, which clearly implied that the agency was supplying the services to the clients as principal. However, the Tribunal looked carefully at the reality underlying the contract and, in particular, who supplied which services to the clients, before ruling in favour of the agency.