DJJ Services Ltd v Revenue and Customs [2025] UKFTT 255 (TC) (24 February 2025)

DJJ Services Ltd v Revenue and Customs [2025] UKFTT 255 (TC) (24 February 2025)

The Tribunal found that, for the period 09/17-09/18, DJJ Services Ltd knew or should have known its transactions were connected with fraudulent evasion of VAT, based on the pattern of consecutive defaulting suppliers, repeated warnings, and inadequate due diligence. The right to deduct input tax for this period is denied. However, HMRC did not prove that DJJ was using its VAT registration solely or principally for abusive or fraudulent purposes, so the deregistration under the Ablessio principle is not justified.

Citation
[2025] UKFTT 255
Parties
Appellant: DJJ Services Ltd; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
24 February 2025
Procedural Posture
VAT Appeal (first Tier Tribunal, Tax Chamber) / Final Judgment After Hearing
Outcome
Appeal allowed in part
Legal Topics
VAT Fraud, Input Tax Deduction, Kittel Principle, Ablessio Principle, Due Diligence, Burden of Proof, VAT Deregistration
Tax Law European Union Law VAT Fraud Input Tax Deduction Kittel Principle Ablessio Principle Due Diligence Burden of Proof +1 more

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Parties

DJJ Services Ltd

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

VAT Appeal (first Tier Tribunal, Tax Chamber) / Final Judgment After Hearing

Legal Issues

  1. 1 Whether DJJ Services Ltd knew or should have known its purchases were connected with fraudulent evasion of VAT (Kittel principle)
  2. 2 Whether DJJ Services Ltd should be deregistered for VAT under the Ablessio principle

Ratio Decidendi

The Tribunal found that, for the period 09/17-09/18, DJJ Services Ltd knew or should have known its transactions were connected with fraudulent evasion of VAT, based on the pattern of consecutive defaulting suppliers, repeated warnings, and inadequate due diligence. The right to deduct input tax for this period is denied. However, HMRC did not prove that DJJ was using its VAT registration solely or principally for abusive or fraudulent purposes, so the deregistration under the Ablessio principle is not justified.

Court Disposition

Appeal allowed in part

Orders

  • Input tax deduction denied for period 09/17-09/18 in the amount of £229,908.
  • HMRC's decision to deregister DJJ Services Ltd for VAT is set aside.