Man cleared of misappropriation over key lack of proof

A man has been cleared of misappropriating around €95,000 which the VAT department claims it was owed after the courts highlighted key elements required to find someone guilty of such a charge were missing.

Carmel Spiteri, as company director, shareholder and secretary of Tal-General Co. Ltd was charged with profiting by misappropriating funds owed to the VAT department.

While he objected to being personally sought for criminal proceedings, and that there was no indication that he had been called on due to his role within the company, the court found a bigger issue with the merits of the case.

A representative from the VAT department testified throughout the proceedings and explained the difference between being charged VAT on an accrual basis vs on a cash basis.

When one is charged on an accrual basis, any invoices issued or expenses paid out within a particular year under review must be listed, even if a company never actually received the funds from the issued invoices or paid out company funds from the expenses incurred.

The witness explained that the accused’s company operated under an accrual’s basis, and also repeatedly said that even if the company had not been paid it was still obligated to declare any invoices issued in the year under review.

Magistrate Donatella Frendo Dimech, presiding over the case, highlighted how to find somebody criminally guilty of misappropriating funds, that person had to receive said funds and then profit off them in the first place.

Frendo Dimech remarked that the court is “perplexed” and “flabbergasted” that a ‘letter to prosecute’ was issued by the VAT department when a representative from the same department declared that the accused had never received the payments in the first place on behalf of his company.

The court also observed that, as stipulated by law, the accused had declared all invoices issued for the period under review despite not being paid for them and that there was no breach in the law here.

Frendo Dimech concluded that the “extreme” charge of misappropriation could not be upheld since Spiteri was never paid the money owed to the VAT department and therefore was never entrusted with that money, and certainly did not profit off it.

The court therefore acquitted him of the charge leveled against him.