Option NTC Ltd v Revenue & Customs [2011] UKFTT 768 (TC) (28 November 2011)

Option NTC Ltd v Revenue & Customs [2011] UKFTT 768 (TC) (28 November 2011)

Option NTC Ltd's transactions were objectively connected to fraudulent VAT losses in MTIC contra-trading chains. The company, through its directors and employees, either knew or ought to have known of the fraudulent nature of the transactions. Therefore, Option is denied the right to deduct input tax under the Kittel principle.

Citation
[2011] UKFTT 768 (TC)
Parties
Appellant: Option NTC Ltd; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
28 November 2011
Procedural Posture
VAT Input Tax Appeal / Final Judgment at First Tier Tribunal (tax)
Outcome
Appeal dismissed
Legal Topics
VAT, MTIC Fraud, Contra Trading, Input Tax Deduction, Corporate Knowledge Attribution
Tax Law European Union Law VAT MTIC Fraud Contra Trading Input Tax Deduction Corporate Knowledge Attribution

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Parties

Option NTC Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether Option NTC Ltd knew or ought to have known its trade in mobile phones was part of fraudulent trade
  2. 2 Whether knowledge (actual or blind-eye) of an employee can be attributed to the company
  3. 3 Whether the denial of input tax claim was lawful

Ratio Decidendi

Option NTC Ltd's transactions were objectively connected to fraudulent VAT losses in MTIC contra-trading chains. The company, through its directors and employees, either knew or ought to have known of the fraudulent nature of the transactions. Therefore, Option is denied the right to deduct input tax under the Kittel principle.

Court Disposition

Appeal dismissed

Orders

  • Input tax claim in the sum of £1,486,436.88 denied
  • No repayment of VAT for periods 06/06 and 07/06