Spearmint Blue Ltd v Revenue & Customs [2012] UKFTT 103 (TC) (07 February 2012)

Spearmint Blue Ltd v Revenue & Customs [2012] UKFTT 103 (TC) (07 February 2012)

The Tribunal found that fraud was established both in the dirty chain leading up to the contra trader and by the contra trader itself. Although there was insufficient evidence to show that the Appellant had actual knowledge of the fraud, the Tribunal held that the Appellant should have known that its transactions were connected with fraudulent evasion of VAT. Therefore, the denial of input VAT was justified under the Kittel principle, and the appeal was dismissed.

Citation
[2012] UKFTT 103
Parties
Appellant: Spearmint Blue Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
07 February 2012
Procedural Posture
VAT Appeal (mtic Fraud) / First Tier Tribunal (tax), Final Judgment
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, MTIC Fraud, Contra Trading, Input Tax Deduction, Knowledge Requirement, Fraudulent Evasion of VAT
Tax Law European Union Law VAT Fraud MTIC Fraud Contra Trading Input Tax Deduction Knowledge Requirement Fraudulent Evasion of VAT

Case Brief

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Parties

Spearmint Blue Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Appeal (mtic Fraud) / First Tier Tribunal (tax), Final Judgment

Legal Issues

  1. 1 Whether the Appellant's input VAT claims were connected to fraudulent evasion of VAT
  2. 2 Whether the Appellant knew or should have known of the connection to fraud
  3. 3 Application of the Axel Kittel test in contra-trading scenarios

Ratio Decidendi

The Tribunal found that fraud was established both in the dirty chain leading up to the contra trader and by the contra trader itself. Although there was insufficient evidence to show that the Appellant had actual knowledge of the fraud, the Tribunal held that the Appellant should have known that its transactions were connected with fraudulent evasion of VAT. Therefore, the denial of input VAT was justified under the Kittel principle, and the appeal was dismissed.

Court Disposition

Appeal dismissed

Orders

  • Input VAT repayment claim of £1,012,011.18 refused
  • No order as to costs specified