Crotek Ltd & Anor v Revenue & Customs [2011] UKFTT 836 (TC) (16 December 2011)

Crotek Ltd & Anor v Revenue & Customs [2011] UKFTT 836 (TC) (16 December 2011)

The Tribunal found that the Appellants knew, or at least ought to have known, that their transactions were connected with the fraudulent evasion of VAT. This conclusion was based on the cumulative evidence of misleading VAT applications, consistent trading patterns with defaulting traders, lack of credible due diligence, and the Appellants' implausible explanations. The Tribunal held that the Appellants' trading behaviour and the context of their transactions indicated actual knowledge of fraud, and alternatively, that the circumstances were such that they should have known of the connection to fraud.

Citation
[2011] UKFTT 836 (TC)
Parties
Appellant: CSL; Appellant: CL; Respondent: HMRC
Jurisdiction
United Kingdom
Judgment Date
16 December 2011
Procedural Posture
VAT Appeal / First Tier Tribunal (tax Chamber) Final Decision
Outcome
Appeals dismissed
Legal Topics
VAT Fraud, MTIC Fraud, Input Tax Deduction, Knowledge of Fraud, Due Diligence, Burden of Proof
Tax Law VAT Fraud MTIC Fraud Input Tax Deduction Knowledge of Fraud Due Diligence Burden of Proof

Case Brief

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Parties

CSL

Appellant

CL

Appellant

HMRC

Respondent

Procedural Posture

VAT Appeal / First Tier Tribunal (tax Chamber) Final Decision

Legal Issues

  1. 1 Whether the Appellants knew or ought to have known their transactions were connected with the fraudulent evasion of VAT
  2. 2 Whether HMRC's investigation and disclosure obligations were met
  3. 3 Whether the Appellants' due diligence was adequate

Ratio Decidendi

The Tribunal found that the Appellants knew, or at least ought to have known, that their transactions were connected with the fraudulent evasion of VAT. This conclusion was based on the cumulative evidence of misleading VAT applications, consistent trading patterns with defaulting traders, lack of credible due diligence, and the Appellants' implausible explanations. The Tribunal held that the Appellants' trading behaviour and the context of their transactions indicated actual knowledge of fraud, and alternatively, that the circumstances were such that they should have known of the connection to fraud.

Court Disposition

Appeals dismissed

Orders

  • The Appellants are to pay the reasonable costs of HMRC, to be assessed by a costs judge if not agreed.