In April 2008, Her Majesty’s Revenue and Customs (HMRC) denied JDI Trading Limited (JDI) the right to deduct input tax in the sum of £688,421 relating to value added tax (VAT) that it had paid to its suppliers during 2006. The case concerned nine transactions involving consignment sales of mobile phones, which JDI purchased in the UK and subsequently exported to an Italian company, Navigo SPA IT. HMRC determined that these transactions were connected to a type of missing trader intra-community (MTIC) fraud, commonly referred to as “carousel fraud.” HMRC alleged, based on the investigation conducted by one of its officers, that JDI knew, or should have known, that the impugned transactions in which it engaged were part of a carousel fraud.

A NERA team led by Senior Vice President Mark Berenblut and Vice President Bradley Heys was retained by counsel for JDI to review the conclusions of the HMRC officer and conduct a detailed financial investigation of the information on which his conclusions were based to determine whether those conclusions (that JDI was a knowledgeable participant in a fraudulent scheme) were supported. NERA's investigation found that the evidence did not support HMRC's claims, and in particular that it need not have been the case that JDI knew or was involved in perpetrating the alleged fraud. NERA's analysis demonstrated that the conclusions drawn by the HMRC officer regarding JDI’s knowledge of and role in the alleged fraud were not supported by the information on which he relied.

In July 2012, the UK Tax Tribunal allowed JDI's appeal and permitted it to deduct the full amount of the claimed input tax. The Tribunal found that HMRC had not proven that JDI had to have known or been a participant in the alleged carousel fraud.