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 carry out adequate due diligence as required by law and HMRC guidance, and the invoices from UP Construct Ltd did not meet regulatory requirements. HMRC's denial of input tax was reasonable under the Kittel principle and VAT regulations.

Citation
[2025] UKFTT 799 (TC)
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
Outcome
Appeal 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

Legal Issues

  1. 1 Whether HCL knew or should have known that its transactions were connected with VAT fraud under the Kittel principle
  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 carry out adequate due diligence as required by law and HMRC guidance, and the invoices from UP Construct Ltd did not meet regulatory requirements. HMRC's denial of input tax was reasonable under the Kittel principle and VAT regulations.

Court Disposition

Appeal dismissed

Orders

  • HCL's appeals against HMRC's decisions to deny input tax totalling £705,741 and £222,246 are dismissed.
  • No right to deduct input tax on the disputed transactions.