Masstech Ltd v Revenue & Customs [2010] UKFTT 386 (TC) (18 August 2010)

Masstech Ltd v Revenue & Customs [2010] UKFTT 386 (TC) (18 August 2010)

HMRC failed, on the balance of probabilities, to establish that the appellant (through Mr. Ahtamad) was aware of MTIC trading at the time of the July 2006 transaction. The tribunal found that, given the appellant's ignorance of MTIC fraud, HMRC did not show that the appellant had means of knowledge or ought to have known that there could be no other reasonable explanation for the transaction than connection with fraudulent VAT evasion. The appeal was allowed.

Citation
[2010] UKFTT 386
Parties
Appellant: Masstech Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
18 August 2010
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal allowed
Legal Topics
MTIC Fraud, Input Tax Denial, Kittel Test, Means of Knowledge, Due Diligence
Tax Law VAT MTIC Fraud Input Tax Denial Kittel Test Means of Knowledge Due Diligence

Case Brief

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Parties

Masstech Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Input Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether the appellant knew or ought to have known its transaction was connected with VAT fraud
  2. 2 Application of the 'ought to have known' limb of the Kittel test in circumstances of alleged ignorance

Ratio Decidendi

HMRC failed, on the balance of probabilities, to establish that the appellant (through Mr. Ahtamad) was aware of MTIC trading at the time of the July 2006 transaction. The tribunal found that, given the appellant's ignorance of MTIC fraud, HMRC did not show that the appellant had means of knowledge or ought to have known that there could be no other reasonable explanation for the transaction than connection with fraudulent VAT evasion. The appeal was allowed.

Court Disposition

Appeal allowed

Orders

  • Input tax claim reinstated
  • HMRC to process VAT repayment