Rigcharm Ltd v Revenue & Customs [2013] UKFTT 270 (TC) (29 April 2013)

Rigcharm Ltd v Revenue & Customs [2013] UKFTT 270 (TC) (29 April 2013)

The Tribunal found that the appellant's transactions were connected with fraudulent VAT evasion, either directly (dirty chains) or via contra-traders (clean chains), and that the appellant knew or should have known of this connection. The evidence, including consistent mark-ups, trading patterns, inadequate due diligence, prior warnings, and the appellant's conduct, established the requisite knowledge. Therefore, HMRC was entitled to deny the input tax claims under the principles established in Kittel and Mobilx.

Citation
[2013] UKFTT 270 (TC)
Parties
Appellant: Rigcharm Ltd; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
29 April 2013
Procedural Posture
VAT Input Tax Appeal (mtic Fraud) / First Tier Tribunal (tax Chamber) Final Decision
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, Input Tax Deduction, MTIC (missing Trader Intra Community) Fraud, Contra Trading, Knowledge Requirement for Denial of Input Tax, Burden of Proof in VAT Fraud Cases
Tax Law European Union Law VAT Fraud Input Tax Deduction MTIC (missing Trader Intra Community) Fraud Contra Trading Knowledge Requirement for Denial of Input Tax Burden of Proof in VAT Fraud Cases

Case Brief

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Parties

Rigcharm Ltd

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Input Tax Appeal (mtic Fraud) / First Tier Tribunal (tax Chamber) Final Decision

Legal Issues

  1. 1 Whether the appellant's transactions were connected with VAT fraud
  2. 2 Whether the appellant knew or should have known of the connection with fraud
  3. 3 Whether HMRC was entitled to deny input tax recovery

Ratio Decidendi

The Tribunal found that the appellant's transactions were connected with fraudulent VAT evasion, either directly (dirty chains) or via contra-traders (clean chains), and that the appellant knew or should have known of this connection. The evidence, including consistent mark-ups, trading patterns, inadequate due diligence, prior warnings, and the appellant's conduct, established the requisite knowledge. Therefore, HMRC was entitled to deny the input tax claims under the principles established in Kittel and Mobilx.

Court Disposition

Appeal dismissed

Orders

  • HMRC's refusal to pay the input tax is upheld
  • Appellant's claim for input tax recovery is denied