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, on the balance of probabilities, DJJ Services Ltd knew or should have known that its transactions from September 2017 to September 2018 were connected with fraudulent evasion of VAT, given the consecutive use of defaulting suppliers, repeated warnings, and inadequate due diligence. The Kittel principle applied, justifying denial of input tax for the relevant period. However, the Tribunal found HMRC had not proved DJJ was using its VAT registration solely or principally for abusive or fraudulent purposes, so the Ablessio-based deregistration could not stand.

Citation
[2025] UKFTT 255 (TC)
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) Final Judgment
Outcome
Appeal allowed in part
Legal Topics
VAT Fraud, Input Tax Deduction, Kittel Principle, Ablessio Principle, VAT Deregistration, Due Diligence, Burden of Proof
Tax Law European Union Law VAT Fraud Input Tax Deduction Kittel Principle Ablessio Principle VAT Deregistration Due Diligence +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) Final Judgment

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, on the balance of probabilities, DJJ Services Ltd knew or should have known that its transactions from September 2017 to September 2018 were connected with fraudulent evasion of VAT, given the consecutive use of defaulting suppliers, repeated warnings, and inadequate due diligence. The Kittel principle applied, justifying denial of input tax for the relevant period. However, the Tribunal found HMRC had not proved DJJ was using its VAT registration solely or principally for abusive or fraudulent purposes, so the Ablessio-based deregistration could not stand.

Court Disposition

Appeal allowed in part

Orders

  • Input tax denial under Kittel principle upheld for period 09/17 - 09/18 in the amount of £229,908.
  • VAT deregistration under Ablessio principle set aside.