AR Communications & Electronics Ltd v Revenue & Customs [2011] UKFTT 637 (TC) (28 September 2011)

AR Communications & Electronics Ltd v Revenue & Customs [2011] UKFTT 637 (TC) (28 September 2011)

ARC was not entitled to repayment of input tax because, on the evidence, it knew or ought to have known that its transactions were connected with the fraudulent evasion of VAT through MTIC fraud and contra trading. The supply chains were contrived, exhibited features typical of MTIC fraud, and ARC's due diligence was inadequate. The Tribunal was satisfied that ARC's knowledge (actual or imputed) precluded input tax recovery under the Kittel principle.

Citation
[2011] UKFTT 637
Parties
Appellant: AR Communications & Electronics Ltd; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
28 September 2011
Procedural Posture
VAT Input Tax Repayment Appeal / First Tier Tribunal (tax), Final Judgment
Outcome
Appeal dismissed
Legal Topics
VAT, Input Tax Repayment, MTIC Fraud, Contra Trading, Knowledge (actual and Imputed), Joint and Several Liability
Tax Law European Union Law VAT Input Tax Repayment MTIC Fraud Contra Trading Knowledge (actual and Imputed) Joint and Several Liability

Case Brief

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Parties

AR Communications & Electronics Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Input Tax Repayment Appeal / First Tier Tribunal (tax), Final Judgment

Legal Issues

  1. 1 Whether ARC was entitled to repayment of input tax under VAT Act 1994 for 16 mobile phone transactions in June and July 2006
  2. 2 Whether ARC knew or ought to have known that its transactions were connected with fraudulent evasion of VAT (MTIC fraud and contra trading)

Ratio Decidendi

ARC was not entitled to repayment of input tax because, on the evidence, it knew or ought to have known that its transactions were connected with the fraudulent evasion of VAT through MTIC fraud and contra trading. The supply chains were contrived, exhibited features typical of MTIC fraud, and ARC's due diligence was inadequate. The Tribunal was satisfied that ARC's knowledge (actual or imputed) precluded input tax recovery under the Kittel principle.

Court Disposition

Appeal dismissed

Orders

  • Repayment of input tax in the sum of £1,214,801.88 refused
  • No order as to costs specified