Lancer Scott Ltd v Revenue and Customs (VAT - when did HMRC have sufficient evidence to issue an assessment) [2024] UKFTT 545 (TC) (17 June 2024)

Lancer Scott Ltd v Revenue and Customs (VAT - when did HMRC have sufficient evidence to issue an assessment) [2024] UKFTT 545 (TC) (17 June 2024)

The Tribunal found that the appellant was not entitled to deduct input VAT on the disputed invoices because no genuine supplies were made, the invoices were false, and at least one director had knowledge of the fraudulent arrangements. HMRC's assessment and penalties were valid, made within the statutory time limits for deliberate conduct, and based on best judgment. The appellant failed to discharge the burden of proving the assessment was incorrect or that supplies were genuine.

Citation
[2024] UKFTT 545 (TC)
Parties
Appellant: Lancer Scott Limited; Respondents: The Commissioners for Her Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
17 June 2024
Procedural Posture
VAT Assessment and Penalty Appeal / First Tier Tribunal (tax) Final Judgment
Outcome
Appeal dismissed
Legal Topics
Input Tax Deduction, VAT Fraud, Best Judgment Assessment, Penalties for Dishonesty, Time Limits for Assessment, Burden of Proof in Tax Appeals
Tax Law VAT Fraud Input Tax Deduction VAT Fraud Best Judgment Assessment Penalties for Dishonesty Time Limits for Assessment +1 more

Case Brief

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Parties

Lancer Scott Limited

Appellant

The Commissioners for Her Majesty's Revenue and Customs

Respondents

Procedural Posture

VAT Assessment and Penalty Appeal / First Tier Tribunal (tax) Final Judgment

Legal Issues

  1. 1 Whether the appellant was entitled to deduct input VAT on invoices from entities controlled by a convicted money launderer
  2. 2 Whether the supplies were genuine or fictitious
  3. 3 Whether the appellant or its directors acted deliberately or dishonestly in reclaiming VAT

Ratio Decidendi

The Tribunal found that the appellant was not entitled to deduct input VAT on the disputed invoices because no genuine supplies were made, the invoices were false, and at least one director had knowledge of the fraudulent arrangements. HMRC's assessment and penalties were valid, made within the statutory time limits for deliberate conduct, and based on best judgment. The appellant failed to discharge the burden of proving the assessment was incorrect or that supplies were genuine.

Court Disposition

Appeal dismissed

Orders

  • Assessment of £551,695 VAT upheld
  • Penalties totalling £126,186 upheld