Vortex Enterprises Limited v The Commissioners for HMRC

Vortex Enterprises Limited v The Commissioners for HMRC

The Tribunal found, on the balance of probabilities, that the Appellant knew that its purchases were connected with MTIC fraud. Even if actual knowledge was not established, the Appellant should have known, given the orchestrated nature of the supply chains, the matching of suppliers and customers, the Appellant’s critical role, and the lack of meaningful due diligence. The only reasonable explanation for the circumstances was that the transactions were connected with fraudulent evasion of VAT. Therefore, the Appellant is disentitled to input tax deduction.

Parties
Appellant: Vortex Enterprises Limited; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
21 December 2022
Procedural Posture
Tax Appeal / First Tier Tribunal (tax Chamber) Judgment
Outcome
Appeal dismissed
Legal Topics
Value Added Tax (vat), Input Tax Deduction, Missing Trader Intra Community (mtic) Fraud, Due Diligence, Fraudulent Evasion of VAT
Tax Law European Union Law Value Added Tax (vat) Input Tax Deduction Missing Trader Intra Community (mtic) Fraud Due Diligence Fraudulent Evasion of VAT

Case Brief

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Parties

Vortex Enterprises Limited

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax Chamber) Judgment

Legal Issues

  1. 1 Whether the Appellant knew or should have known that its purchases were connected with the fraudulent evasion of VAT (MTIC fraud) and is therefore disentitled to input tax deduction.

Ratio Decidendi

The Tribunal found, on the balance of probabilities, that the Appellant knew that its purchases were connected with MTIC fraud. Even if actual knowledge was not established, the Appellant should have known, given the orchestrated nature of the supply chains, the matching of suppliers and customers, the Appellant’s critical role, and the lack of meaningful due diligence. The only reasonable explanation for the circumstances was that the transactions were connected with fraudulent evasion of VAT. Therefore, the Appellant is disentitled to input tax deduction.

Court Disposition

Appeal dismissed

Orders

  • The Appellant’s appeal against the denial of input tax deduction is dismissed.
  • The assessments and decisions of HMRC are upheld.