Mobilx Ltd v HM Revenue & Customs

Mobilx Ltd v HM Revenue & Customs

Mobilx should have known, based on repeated objective warnings and evidence, that its transactions were more likely than not to be connected with VAT fraud, and failed to take proportionate steps such as ceasing or altering its trading methods; thus, it forfeited the right to deduct input tax.

Parties
Appellant: Mobilx Limited (in Administration); Respondents: Her Majesty’s Commissioners for Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
03 February 2009
Procedural Posture
Appeal / Judgment
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, MTIC Fraud, Input Tax Deduction, Constructive Knowledge, Due Diligence, Supply Chain Integrity
Tax Law Commercial Law VAT Fraud MTIC Fraud Input Tax Deduction Constructive Knowledge Due Diligence Supply Chain Integrity

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Parties

Mobilx Limited (in Administration)

Appellant

Her Majesty’s Commissioners for Revenue and Customs

Respondents

Procedural Posture

Appeal / Judgment

Legal Issues

  1. 1 Whether Mobilx should have known its transactions were connected with VAT fraud
  2. 2 Whether the Tribunal applied the correct legal test from Kittel
  3. 3 Whether the Tribunal's factual findings were justified

Ratio Decidendi

Mobilx should have known, based on repeated objective warnings and evidence, that its transactions were more likely than not to be connected with VAT fraud, and failed to take proportionate steps such as ceasing or altering its trading methods; thus, it forfeited the right to deduct input tax.

Court Disposition

Appeal dismissed

Orders

  • Mobilx's appeal against HMRC's refusal to repay input tax is dismissed.
  • Mobilx forfeits the right of deduction for input tax claimed in the relevant period.