Phonepoint Communications Ltd v Revenue & Customs [2010] UKFTT 452 (TC) (28 September 2010)

Phonepoint Communications Ltd v Revenue & Customs [2010] UKFTT 452 (TC) (28 September 2010)

The tribunal found that each of the 20 deal chains was implemented with a view to defrauding HMRC of VAT, the Appellant's due diligence was superficial and did not address obvious risks, and the Appellant either knew or should have known its transactions were connected to fraudulent VAT evasion. Consequently, the...

Source-derived case information.

Citation
[2010] UKFTT 452 (TC)
Parties
Appellant: Phonepoint Communications Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
28 September 2010
Procedural Posture
VAT Input Tax Appeal / Final Judgment
Outcome
Appeal dismissed
Legal Topics
MTIC Fraud, VAT Input Tax Deduction, Kittel Test, Due Diligence, Constructive Knowledge
Tax Law European Union Law Fraud MTIC Fraud VAT Input Tax Deduction Kittel Test Due Diligence Constructive Knowledge

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Summary, issues, holding and outcome

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Parties

Phonepoint Communications Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Input Tax Appeal / Final Judgment

Legal Issues

  1. 1 Whether the Appellant knew or ought to have known its transactions were connected to fraudulent VAT evasion
  2. 2 Whether HMRC suffered a VAT loss traceable to a defaulting trader in the transaction chains
  3. 3 Whether the Appellant is entitled to repayment of input VAT

Ratio Decidendi

The tribunal found that each of the 20 deal chains was implemented with a view to defrauding HMRC of VAT, the Appellant's due diligence was superficial and did not address obvious risks, and the Appellant either knew or should have known its transactions were connected to fraudulent VAT evasion. Consequently, the Appellant is disentitled to repayment of input VAT.

Court Disposition

Appeal dismissed

Orders

  • HMRC's refusal to repay input VAT is upheld
  • Appellant's claims for repayment of input VAT for periods 06/06 and 07/06 are denied