Pacfic Computers Ltd v Revenue and Customs (VAT - MTIC fraud - case remitted from Upper Tribunal - whether appellant should have known or knew that its transactions were connected to fraudulent evasion of VAT) [2026] UKFTT 603 (TC) (17 April 2016)

Pacfic Computers Ltd v Revenue and Customs (VAT - MTIC fraud - case remitted from Upper Tribunal - whether appellant should have known or knew that its transactions were connected to fraudulent evasion of VAT) [2026] UKFTT 603 (TC) (17 April 2016)

The Tribunal finds that PCL either knew or should have known that its transactions were connected to fraudulent evasion of VAT. The evidence demonstrates that PCL's due diligence was inadequate, red flags were ignored, and the circumstances—including supplier referral by a competitor, market warnings, and Notice 726—were sufficient to put PCL on notice. The burden of proof is met by HMRC. Appeal dismissed.

Citation
[2026] UKFTT 603 (TC)
Parties
Appellant: Pacfic Computers Limited; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
17 April 2016
Procedural Posture
VAT Appeal (mtic Fraud) / Remitted Hearing Before First Tier Tribunal After Upper Tribunal Decision
Outcome
Appeal dismissed
Legal Topics
MTIC Fraud, Input Tax Recovery, Knowledge or Means of Knowledge of Fraud, Burden of Proof, Due Diligence, Notice 726
Tax Law VAT Fraud MTIC Fraud Input Tax Recovery Knowledge or Means of Knowledge of Fraud Burden of Proof Due Diligence +1 more

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Parties

Pacfic Computers Limited

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

VAT Appeal (mtic Fraud) / Remitted Hearing Before First Tier Tribunal After Upper Tribunal Decision

Legal Issues

  1. 1 Whether the appellant knew or should have known its transactions were connected to fraudulent evasion of VAT
  2. 2 Whether HMRC proved knowledge or means of knowledge
  3. 3 Adequacy of due diligence and compliance with Notice 726

Ratio Decidendi

The Tribunal finds that PCL either knew or should have known that its transactions were connected to fraudulent evasion of VAT. The evidence demonstrates that PCL's due diligence was inadequate, red flags were ignored, and the circumstances—including supplier referral by a competitor, market warnings, and Notice 726—were sufficient to put PCL on notice. The burden of proof is met by HMRC. Appeal dismissed.

Court Disposition

Appeal dismissed

Orders

  • Deduction of £428,525.74 input tax for period 09/06 denied
  • No order as to disputed input tax for period 06/06