Harry Construction Ltd v Revenue and Customs (VAT - Kittel - whether taxpayer knew or should have known that transactions were connected with VAT fraud) [2025] UKFTT 799 (TC) (30 June 2025)

Harry Construction Ltd v Revenue and Customs (VAT - Kittel - whether taxpayer knew or should have known that transactions were connected with VAT fraud) [2025] UKFTT 799 (TC) (30 June 2025)

HCL knew or should have known that its transactions were connected with VAT fraud, failed to conduct adequate due diligence, and the invoices from UP Construct Ltd did not meet regulatory requirements; thus, HMRC's denial of input tax claims was reasonable and lawful.

Citation
[2025] UKFTT 799
Parties
Appellant: Harry Construction Limited; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
30 June 2025
Procedural Posture
VAT Appeal (first Tier Tribunal Tax) / Final Judgment After Full Hearing
Outcome
Appeals dismissed
Legal Topics
VAT Fraud, Input Tax Deduction, Kittel Principle, Due Diligence, Construction Industry Supply Chains
Tax Law European Union Law VAT Fraud Input Tax Deduction Kittel Principle Due Diligence Construction Industry Supply Chains

Case Brief

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Parties

Harry Construction Limited

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether HCL knew or should have known that its transactions were connected with VAT fraud (Kittel test)
  2. 2 Whether invoices from UP Construct Ltd met the requirements of regulation 14, Value Added Tax Regulations 1995
  3. 3 Whether HMRC's decision to deny input tax claims was reasonable under regulation 29(2) VAT Regulations 1995

Ratio Decidendi

HCL knew or should have known that its transactions were connected with VAT fraud, failed to conduct adequate due diligence, and the invoices from UP Construct Ltd did not meet regulatory requirements; thus, HMRC's denial of input tax claims was reasonable and lawful.

Court Disposition

Appeals dismissed

Orders

  • HCL's appeals against HMRC's decisions are dismissed.
  • Input tax claims totalling £705,741 and £222,246 are denied.