Procomm Consultancy Ltd v Revenue & Customs [2010] UKFTT 561 (TC) (10 November 2010)

Procomm Consultancy Ltd v Revenue & Customs [2010] UKFTT 561 (TC) (10 November 2010)

The Tribunal found that all the transactions in question were connected with fraudulent evasion of VAT and that Procomm knew or ought to have known of this connection. The evidence showed that Procomm's due diligence was inadequate, the deal chains were circular and artificial, and Procomm's trading practices were consistent with participation in MTIC fraud. Therefore, Procomm was not entitled to deduct the input tax claimed.

Citation
[2010] UKFTT 561
Parties
Appellant: Procomm Consultancy Ltd; Respondents: The Commissioners for Her Majesty’s Revenue and Customs (VAT)
Jurisdiction
United Kingdom
Judgment Date
10 November 2010
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax Chamber) Final Judgment
Outcome
Appeal dismissed
Legal Topics
VAT, Input Tax Deduction, MTIC Fraud, Fraudulent Evasion of VAT, Due Diligence, Burden of Proof
Tax Law European Union Law VAT Input Tax Deduction MTIC Fraud Fraudulent Evasion of VAT Due Diligence Burden of Proof

Case Brief

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Parties

Procomm Consultancy Ltd

Appellant

The Commissioners for Her Majesty’s Revenue and Customs (VAT)

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the input tax claimed by Procomm was incurred in transactions connected with the fraudulent evasion of VAT
  2. 2 Whether Procomm knew or ought to have known that its transactions were connected with VAT fraud

Ratio Decidendi

The Tribunal found that all the transactions in question were connected with fraudulent evasion of VAT and that Procomm knew or ought to have known of this connection. The evidence showed that Procomm's due diligence was inadequate, the deal chains were circular and artificial, and Procomm's trading practices were consistent with participation in MTIC fraud. Therefore, Procomm was not entitled to deduct the input tax claimed.

Court Disposition

Appeal dismissed

Orders

  • Procomm is denied entitlement to deduct input tax in the sum of £773,850 for VAT period 03/06 and £2,216,592.80 for VAT period 05/06.