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 proved that the Appellant had actual knowledge of the connection to fraudulent VAT evasion, the Appellant should have known that its purchases were connected with such fraud in each of the 19 deals. The Tribunal found that the Appellant's trading patterns, lack of commercial risk, and the structure of the supply chains should have alerted it to the risk of fraud. Accordingly, the right to deduct input tax was denied.

Citation
[2010] UKFTT 131 (TC)
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 Appeal / First Tier Tribunal (tax) Substantive Decision
Outcome
Appeal dismissed
Legal Topics
VAT, Input Tax Credit, MTIC Fraud, Joint and Several Liability, Due Diligence, Knowledge Test, Supply Chains
Tax Law European Union Law VAT Input Tax Credit MTIC Fraud Joint and Several Liability Due Diligence Knowledge Test +1 more

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Parties

Blada Limited

Appellant

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

Respondents

Procedural Posture

VAT Appeal / First Tier Tribunal (tax) Substantive Decision

Legal Issues

  1. 1 Whether the Appellant's purchases in the identified deals were connected with fraudulent evasion of VAT as per Axel Kittel
  2. 2 Whether the Appellant knew or should have known that by its purchase it was participating in a transaction connected with fraudulent evasion of VAT

Ratio Decidendi

The Tribunal held that while HMRC had not proved that the Appellant had actual knowledge of the connection to fraudulent VAT evasion, the Appellant should have known that its purchases were connected with such fraud in each of the 19 deals. The Tribunal found that the Appellant's trading patterns, lack of commercial risk, and the structure of the supply chains should have alerted it to the risk of fraud. Accordingly, the right to deduct input tax was denied.

Court Disposition

Appeal dismissed

Orders

  • Input tax credit of £2,260,981.84 denied to the Appellant for the 19 purchase transactions in question.