Deandrake Ltd v Revenue & Customs [2011] UKFTT 250 (TC) (14 April 2011)

Deandrake Ltd v Revenue & Customs [2011] UKFTT 250 (TC) (14 April 2011)

The Tribunal found that while the Appellant did not have actual knowledge that its transactions were connected with VAT fraud, it ought to have known, given the objective circumstances, the nature of the transactions, the lack of genuine due diligence, and the warnings received. The only reasonable explanation for the transactions was their connection to fraud, and thus the right to deduct input tax was denied under the Kittel principle.

Citation
[2011] UKFTT 250
Parties
Appellant: Deandrake Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
14 April 2011
Procedural Posture
VAT Appeal (first Tier Tribunal Tax) / Final Judgment
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, MTIC Fraud, Input Tax Deduction, Attribution of Knowledge, Due Diligence, Kittel Principle
Tax Law European Union Law VAT Fraud MTIC Fraud Input Tax Deduction Attribution of Knowledge Due Diligence Kittel Principle

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Parties

Deandrake Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Appeal (first Tier Tribunal Tax) / Final Judgment

Legal Issues

  1. 1 Whether the Appellant knew or ought to have known that its transactions were connected with the fraudulent evasion of VAT
  2. 2 Whether the right to deduct input tax should be denied under the Kittel principle

Ratio Decidendi

The Tribunal found that while the Appellant did not have actual knowledge that its transactions were connected with VAT fraud, it ought to have known, given the objective circumstances, the nature of the transactions, the lack of genuine due diligence, and the warnings received. The only reasonable explanation for the transactions was their connection to fraud, and thus the right to deduct input tax was denied under the Kittel principle.

Court Disposition

Appeal dismissed

Orders

  • Input tax deduction of £181,125.88 denied to the Appellant
  • No order as to costs specified