Lakonia Ltd v Revenue & Customs (VALUE ADDED TAX - MTIC appeal) [2015] UKFTT 346 (TC) (14 July 2015)

Lakonia Ltd v Revenue & Customs (VALUE ADDED TAX - MTIC appeal) [2015] UKFTT 346 (TC) (14 July 2015)

The Tribunal found that International must have known, or it was inconceivable it did not know, that its 84 deals were connected to fraudulent VAT losses through contra-traders. The circumstantial evidence—circular payment chains, involvement in the Malaga cell, uncommercial delays, concealed loan funding, and the role of associated company Limited—put knowledge beyond doubt. Accordingly, input tax recovery was denied under the Kittel principle and the appeal was dismissed.

Citation
[2015] UKFTT 346
Parties
Appellant: Lakonia Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
14 July 2015
Procedural Posture
Value Added Tax MTIC Appeal / First Tier Tribunal (tax) Final Judgment
Outcome
Appeal dismissed
Legal Topics
Missing Trader Intra Community (mtic) Fraud, Input Tax Recovery, Contra Trading, Knowledge of Fraud, Kittel Principle
Tax Law VAT Law Fraud Missing Trader Intra Community (mtic) Fraud Input Tax Recovery Contra Trading Knowledge of Fraud Kittel Principle

Case Brief

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Parties

Lakonia Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Value Added Tax MTIC Appeal / First Tier Tribunal (tax) Final Judgment

Legal Issues

  1. 1 Whether International's 84 deals were connected to fraudulent VAT losses through contra-traders
  2. 2 Whether International knew or must have known of the connection to fraudulent VAT losses
  3. 3 Whether input tax claims should be denied under the Kittel principle

Ratio Decidendi

The Tribunal found that International must have known, or it was inconceivable it did not know, that its 84 deals were connected to fraudulent VAT losses through contra-traders. The circumstantial evidence—circular payment chains, involvement in the Malaga cell, uncommercial delays, concealed loan funding, and the role of associated company Limited—put knowledge beyond doubt. Accordingly, input tax recovery was denied under the Kittel principle and the appeal was dismissed.

Court Disposition

Appeal dismissed

Orders

  • Input tax recovery denied for all 84 deals
  • Respondents awarded their costs