MD Construction (Bradford) Ltd v Revenue & Customs (VAT - INPUT TAX : Evidence for claim) [2018] UKFTT 532 (TC) (04 September 2018)

MD Construction (Bradford) Ltd v Revenue & Customs (VAT - INPUT TAX : Evidence for claim) [2018] UKFTT 532 (TC) (04 September 2018)

The Tribunal found that MD Construction (Bradford) Limited, through its directors, should have known that the scrap metal transactions were connected with fraudulent evasion of VAT. The evidence demonstrated a pattern of trade inconsistent with ordinary commercial practice, lack of due diligence, and a cavalier attitude to risk and compliance. Therefore, the denial of input tax by HMRC was lawful under the Kittel principles.

Citation
[2018] UKFTT 532 (TC)
Parties
Appellant: MD Construction (Bradford) Limited; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
04 September 2018
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax) Final Judgment
Outcome
Appeal dismissed
Legal Topics
Input Tax Deduction, MTIC Fraud, Fraudulent Evasion of VAT, Knowledge Requirement, Evidence for VAT Claims
Tax Law VAT Input Tax Deduction MTIC Fraud Fraudulent Evasion of VAT Knowledge Requirement Evidence for VAT Claims

Case Brief

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Parties

MD Construction (Bradford) Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Input Tax Appeal / First Tier Tribunal (tax) Final Judgment

Legal Issues

  1. 1 Was there a tax loss?
  2. 2 Did the loss result from fraudulent evasion?
  3. 3 Were the transactions subject to appeal connected with that evasion?

Ratio Decidendi

The Tribunal found that MD Construction (Bradford) Limited, through its directors, should have known that the scrap metal transactions were connected with fraudulent evasion of VAT. The evidence demonstrated a pattern of trade inconsistent with ordinary commercial practice, lack of due diligence, and a cavalier attitude to risk and compliance. Therefore, the denial of input tax by HMRC was lawful under the Kittel principles.

Court Disposition

Appeal dismissed

Orders

  • Input tax claim denied
  • VAT return amended as per HMRC decision