Electrade 247 Ltd v Revenue and Customs (VAT - INPUT TAX : Other) [2015] UKFTT 637 (TC) (07 December 2015)

Electrade 247 Ltd v Revenue and Customs (VAT - INPUT TAX : Other) [2015] UKFTT 637 (TC) (07 December 2015)

The Tribunal found that while all 10 deals were connected to fraudulent VAT losses, the frauds were of the 'acquisition fraud' variety and did not extend to the Appellant's onward transactions. The Tribunal held that the Respondents failed to prove that the Appellant knew or must have known of the connection to fraud in most deals, except those involving Global Roaming as supplier, where the Appellant ought to have known due to inadequate due diligence. Accordingly, input tax was disallowed only in relation to those specific deals.

Citation
[2015] UKFTT 637
Parties
Appellant: Electrade 247 Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
07 December 2015
Procedural Posture
VAT MTIC Appeal (input Tax) / First Tier Tribunal (tax) Substantive Decision
Outcome
Appeal allowed in part
Legal Topics
Missing Trader Intra Community (mtic) Fraud, Input Tax Deduction, Acquisition Fraud, Knowledge and Means of Knowledge in VAT Fraud, Due Diligence in VAT Chains
Tax Law VAT Law Missing Trader Intra Community (mtic) Fraud Input Tax Deduction Acquisition Fraud Knowledge and Means of Knowledge in VAT Fraud Due Diligence in VAT Chains

Case Brief

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Parties

Electrade 247 Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT MTIC Appeal (input Tax) / First Tier Tribunal (tax) Substantive Decision

Legal Issues

  1. 1 Whether all 10 deals were connected to fraudulent VAT losses
  2. 2 Whether the frauds were 'acquisition frauds' or extended to the Appellant's transactions
  3. 3 Whether the Appellant knew or ought to have known of the connection to fraud

Ratio Decidendi

The Tribunal found that while all 10 deals were connected to fraudulent VAT losses, the frauds were of the 'acquisition fraud' variety and did not extend to the Appellant's onward transactions. The Tribunal held that the Respondents failed to prove that the Appellant knew or must have known of the connection to fraud in most deals, except those involving Global Roaming as supplier, where the Appellant ought to have known due to inadequate due diligence. Accordingly, input tax was disallowed only in relation to those specific deals.

Court Disposition

Appeal allowed in part

Orders

  • Input tax credit to be allowed except in relation to purchases from Global Roaming, where input tax is disallowed.