Pars Technology Ltd v Revenue & Customs [2011] UKFTT 9 (TC) (15 December 2010)

Pars Technology Ltd v Revenue & Customs [2011] UKFTT 9 (TC) (15 December 2010)

The Tribunal found that Pars Technology Ltd's transactions were connected to fraudulent evasion of VAT and that Pars knew or should have known of this connection. Applying the Kittel principle as affirmed in Mobilx, the right to deduct input tax is lost in full where the taxpayer is a participant in fraud, whether by actual knowledge or by failing to take reasonable precautions that would have revealed the fraud.

Citation
[2011] UKFTT 9 (TC)
Parties
Appellant: Pars Technology Ltd; Respondent: HM Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
15 December 2010
Procedural Posture
VAT Input Tax Appeal / Final Judgment
Outcome
Appeal dismissed
Legal Topics
VAT, MTIC Fraud, Input Tax Deduction, Fraudulent Evasion of VAT, Burden of Proof, Knowledge Test
Tax Law European Union Law VAT MTIC Fraud Input Tax Deduction Fraudulent Evasion of VAT Burden of Proof Knowledge Test

Case Brief

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Parties

Pars Technology Ltd

Appellant

HM Revenue & Customs

Respondent

Procedural Posture

VAT Input Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether Pars Technology Ltd's transactions were connected to fraudulent evasion of VAT
  2. 2 Whether Pars Technology Ltd knew or should have known of the connection to fraud
  3. 3 Whether HMRC's denial of input tax was lawful under Kittel principles

Ratio Decidendi

The Tribunal found that Pars Technology Ltd's transactions were connected to fraudulent evasion of VAT and that Pars knew or should have known of this connection. Applying the Kittel principle as affirmed in Mobilx, the right to deduct input tax is lost in full where the taxpayer is a participant in fraud, whether by actual knowledge or by failing to take reasonable precautions that would have revealed the fraud.

Court Disposition

Appeal dismissed

Orders

  • Input tax recovery denied for April and May 2006
  • Pars Technology Ltd not entitled to recover £1,285,026.53 for April 2006 and £1,209,796.42 for May 2006