Else Refining and Recycling Ltd v Revenue & Customs [2012] UKFTT 470 (TC) (23 July 2012)

Else Refining and Recycling Ltd v Revenue & Customs [2012] UKFTT 470 (TC) (23 July 2012)

The Tribunal held that although Else did not actually know of the connection to VAT fraud, it should have known because the only reasonable explanation for the circumstances of the transactions—including high profits, lack of commerciality, inadequate due diligence, and contrived supply chains—was that they were connected with fraudulent VAT evasion. Thus, Else was disentitled to deduct input VAT on the relevant purchases.

Citation
[2012] UKFTT 470
Parties
Appellant: Else Refining and Recycling Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
23 July 2012
Procedural Posture
VAT Input Tax Appeal (mtic Fraud) / First Tier Tribunal (tax) Final Judgment
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, Input Tax Deduction, MTIC (missing Trader Intra Community) Fraud, Knowledge and Due Diligence in VAT Chains
Tax Law European Union Law VAT Fraud Input Tax Deduction MTIC (missing Trader Intra Community) Fraud Knowledge and Due Diligence in VAT Chains

Case Brief

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Parties

Else Refining and Recycling Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Input Tax Appeal (mtic Fraud) / First Tier Tribunal (tax) Final Judgment

Legal Issues

  1. 1 Whether the appellant knew or should have known that its purchases were connected with fraudulent VAT evasion, thereby disentitling it to input tax deduction under the Kittel/Mobilx principles.

Ratio Decidendi

The Tribunal held that although Else did not actually know of the connection to VAT fraud, it should have known because the only reasonable explanation for the circumstances of the transactions—including high profits, lack of commerciality, inadequate due diligence, and contrived supply chains—was that they were connected with fraudulent VAT evasion. Thus, Else was disentitled to deduct input VAT on the relevant purchases.

Court Disposition

Appeal dismissed

Orders

  • Input VAT deduction on the disputed transactions is denied to Else Refining and Recycling Limited.