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 Appellant, through its directors, should have known that the transactions were connected with VAT fraud. The pattern of trade, lack of commercial rationale, suspicious relationships, and failure to take reasonable precautions established constructive knowledge under the Kittel principle. Therefore, the right to deduct input tax was lawfully denied.

Citation
[2018] UKFTT 532
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
VAT Fraud, Input Tax Deduction, Kittel Principle, Knowledge of Fraud, MTIC Fraud
Tax Law European Union Law VAT Fraud Input Tax Deduction Kittel Principle Knowledge of Fraud MTIC Fraud

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 tax loss result from fraudulent evasion?
  3. 3 Were the transactions connected with that evasion?

Ratio Decidendi

The Appellant, through its directors, should have known that the transactions were connected with VAT fraud. The pattern of trade, lack of commercial rationale, suspicious relationships, and failure to take reasonable precautions established constructive knowledge under the Kittel principle. Therefore, the right to deduct input tax was lawfully denied.

Court Disposition

Appeal dismissed

Orders

  • The Appellant's claim for input tax deduction is denied.
  • The VAT return is amended in accordance with HMRC's decision.