Butt v Revenue and Customs (VAT - denial of input tax - missing trader intra community fraud (MTIC)) [2026] UKFTT 623 (TC) (23 April 2026)

Butt v Revenue and Customs (VAT - denial of input tax - missing trader intra community fraud (MTIC)) [2026] UKFTT 623 (TC) (23 April 2026)

The Tribunal found that HMRC lawfully denied Quantum's input tax under the Kittel principle because the transactions were connected to fraudulent VAT evasion and Mr Butt, as director, knew or should have known of this connection. The evidence showed repeated warnings, prior involvement in similar companies, and objective circumstances that made the only reasonable explanation for the transactions their connection to fraud. Penalties under sections 69C and 69D VAT Act 1994 were properly imposed.

Citation
[2026] UKFTT 623 (TC)
Parties
Appellant: Rizwan Butt; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
23 April 2026
Procedural Posture
VAT Input Tax Denial and Director Penalty Appeal / First Tier Tribunal (tax) Judgment
Outcome
Appeal dismissed
Legal Topics
Input Tax Denial, Missing Trader Intra Community Fraud (mtic), Director's Liability for Company Penalties, Section 69 C and 69 D VAT Act 1994, Kittel Principle
Tax Law VAT Law Fraud Input Tax Denial Missing Trader Intra Community Fraud (mtic) Director's Liability for Company Penalties Section 69 C and 69 D VAT Act 1994 Kittel Principle

Case Brief

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Parties

Rizwan Butt

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

VAT Input Tax Denial and Director Penalty Appeal / First Tier Tribunal (tax) Judgment

Legal Issues

  1. 1 Whether HMRC lawfully denied input tax to Quantum London Limited under the Kittel principle for transactions connected to VAT fraud
  2. 2 Whether Mr Butt, as director, knew or should have known of the connection to fraudulent VAT evasion
  3. 3 Whether penalties under sections 69C and 69D VAT Act 1994 were properly imposed on Quantum and Mr Butt

Ratio Decidendi

The Tribunal found that HMRC lawfully denied Quantum's input tax under the Kittel principle because the transactions were connected to fraudulent VAT evasion and Mr Butt, as director, knew or should have known of this connection. The evidence showed repeated warnings, prior involvement in similar companies, and objective circumstances that made the only reasonable explanation for the transactions their connection to fraud. Penalties under sections 69C and 69D VAT Act 1994 were properly imposed.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed in full.
  • The penalties imposed under sections 69C and 69D VAT Act 1994 are upheld.