Blada Ltd v Revenue & Customs [2010] UKFTT 131 (TC) (24 March 2010)

Blada Ltd v Revenue & Customs [2010] UKFTT 131 (TC) (24 March 2010)

The Tribunal held that while HMRC had not proven that Blada Ltd had actual knowledge of the connection to VAT fraud, the company should have known that its transactions were connected with fraudulent evasion of VAT. The objective circumstances and trading patterns, including the nature of the supply chains and the prevalence of MTIC fraud, imposed a duty of inquiry and awareness on the Appellant, which it failed to discharge. Therefore, the denial of input tax credit was justified.

Citation
[2010] UKFTT 131
Parties
Appellant: Blada Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs (Value Added Tax)
Jurisdiction
United Kingdom
Judgment Date
24 March 2010
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax) Decision
Outcome
Appeal dismissed
Legal Topics
VAT, Input Tax Credit, MTIC Fraud, Fraudulent Evasion of VAT, Knowledge Test, Supply Chain Liability
Tax Law European Union Law VAT Input Tax Credit MTIC Fraud Fraudulent Evasion of VAT Knowledge Test Supply Chain Liability

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Parties

Blada Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs (Value Added Tax)

Respondents

Procedural Posture

VAT Input Tax Appeal / First Tier Tribunal (tax) Decision

Legal Issues

  1. 1 Whether the Appellant's purchases were connected with fraudulent evasion of VAT as per Axel Kittel
  2. 2 Whether the Appellant knew or should have known of the connection to VAT fraud in the relevant transactions

Ratio Decidendi

The Tribunal held that while HMRC had not proven that Blada Ltd had actual knowledge of the connection to VAT fraud, the company should have known that its transactions were connected with fraudulent evasion of VAT. The objective circumstances and trading patterns, including the nature of the supply chains and the prevalence of MTIC fraud, imposed a duty of inquiry and awareness on the Appellant, which it failed to discharge. Therefore, the denial of input tax credit was justified.

Court Disposition

Appeal dismissed

Orders

  • Input tax credit claims for the 19 transactions in VAT periods 03/06, 04/06, and 05/06 are denied.