IMPACT CONTRACTING SOLUTIONS LIMITED v Revenue & Customs (VAT - preliminary issue - whether Ablessio principle only applicable to party committing VAT fraud itself) [2022] UKFTT 47 (TC) (08 February 2022)

IMPACT CONTRACTING SOLUTIONS LIMITED v Revenue & Customs (VAT - preliminary issue - whether Ablessio principle only applicable to party committing VAT fraud itself) [2022] UKFTT 47 (TC) (08 February 2022)

The Ablessio principle is not limited to parties directly committing VAT fraud but extends to parties facilitating VAT fraud, provided there is sound evidence that the party knew or should have known it was facilitating fraud. Dishonesty is not required; knowledge or means of knowledge suffices. Deregistration in such circumstances is lawful and proportionate under EU law and UK implementing legislation.

Citation
[2022] UKFTT 47
Parties
Appellant: Impact Contracting Solutions Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
08 February 2022
Procedural Posture
VAT Deregistration Appeal / Preliminary Issue Determination
Outcome
Preliminary issue determined in favour of HMRC; Ablessio principle applies to facilitators of VAT fraud.
Legal Topics
VAT Registration, VAT Fraud, Ablessio Principle, Facilitation of VAT Fraud, Deregistration Powers, Abuse of Rights Doctrine
Tax Law European Union Law VAT Registration VAT Fraud Ablessio Principle Facilitation of VAT Fraud Deregistration Powers Abuse of Rights Doctrine

Case Brief

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Parties

Impact Contracting Solutions Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Deregistration Appeal / Preliminary Issue Determination

Legal Issues

  1. 1 Does the Ablessio principle apply only to a party that has itself fraudulently defaulted on VAT obligations, or also to a party who has facilitated VAT fraud of another party?
  2. 2 If applicable to facilitators, is simple facilitation sufficient, or must dishonesty or knowledge be proved?

Ratio Decidendi

The Ablessio principle is not limited to parties directly committing VAT fraud but extends to parties facilitating VAT fraud, provided there is sound evidence that the party knew or should have known it was facilitating fraud. Dishonesty is not required; knowledge or means of knowledge suffices. Deregistration in such circumstances is lawful and proportionate under EU law and UK implementing legislation.

Court Disposition

Preliminary issue determined in favour of HMRC; Ablessio principle applies to facilitators of VAT fraud.

Orders

  • The Tribunal finds that the Ablessio principle applies both to parties committing VAT fraud and to those facilitating VAT fraud, provided the facilitator knew or should have known of the fraud.