Synectiv Ltd v Revenue & Customs [2013] UKFTT 677 (TC) (22 November 2013)

Synectiv Ltd v Revenue & Customs [2013] UKFTT 677 (TC) (22 November 2013)

The Tribunal found that Synectiv either knew or should have known that its transactions were connected to fraudulent evasion of VAT. The objective features of the transactions, including the structure, payment flows, and lack of adequate due diligence, led to the conclusion that Synectiv was a participant in MTIC fraud, and thus not entitled to deduct input VAT.

Citation
[2013] UKFTT 677 (TC)
Parties
Appellant: Synectiv Limited; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
22 November 2013
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision
Outcome
Appeal dismissed
Legal Topics
VAT Fraud, Input Tax Deduction, MTIC Fraud, Due Diligence, Knowledge Requirement for VAT Deduction
Tax Law European Union Law VAT Fraud Input Tax Deduction MTIC Fraud Due Diligence Knowledge Requirement for VAT Deduction

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Parties

Synectiv Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Input Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Decision

Legal Issues

  1. 1 Whether Synectiv Limited knew or should have known its transactions were connected to fraudulent evasion of VAT (MTIC fraud)
  2. 2 Whether HMRC was correct to deny input tax deduction on the basis of knowledge or means of knowledge of fraud

Ratio Decidendi

The Tribunal found that Synectiv either knew or should have known that its transactions were connected to fraudulent evasion of VAT. The objective features of the transactions, including the structure, payment flows, and lack of adequate due diligence, led to the conclusion that Synectiv was a participant in MTIC fraud, and thus not entitled to deduct input VAT.

Court Disposition

Appeal dismissed

Orders

  • Input tax deduction of £1,418,900 denied to Synectiv Limited
  • No order as to costs specified