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The suggestion that tax avoidance measures do not amount to a business activity (see V3.407), was considered in the context of fraud in the cases of Optigen Ltd and Fulcrum Electronics Ltd¹. These cases followed the earlier case of Bond House², where the appellant was the unwitting participant in a carousel fraud (a form of missing trader fraud). The Tribunal held in Bond House that the appellant was not entitled to input tax recovery on the purchase of CPUs since the purpose of the transactions as a whole was to facilitate fraud, which did not amount to a business activity. The facts in Optigen and Fulcrum were similar, and the tribunal reached the same decision. The High Court, however, referred the cases to the ECJ³, posing the following questions:

1. Ìý

   (A)ÌýÌýÌýÌý Under the common system of VAT, and in the light of Council Directives 67/227/EEC and 77/388/EEC⁴, is the entitlement of a trader to credit for a payment in respect of VAT under a transaction