Vortex Enterprises Ltd v Revenue and Customs (VALUE ADDED TAX - denial of relief for VAT input tax on the basis that the Appellant knew or should have known...) [2023] UKFTT 211 (TC) (21 December 2022)

Vortex Enterprises Ltd v Revenue and Customs (VALUE ADDED TAX - denial of relief for VAT input tax on the basis that the Appellant knew or should have known...) [2023] UKFTT 211 (TC) (21 December 2022)

On the balance of probabilities, the Tribunal found that the appellant knew its purchases were connected with the fraudulent evasion of VAT, or at the very least, should have known of that connection. The appellant failed to carry out adequate due diligence despite repeated warnings and advice, and the structure and circumstances of the transactions were such that knowledge or willful blindness was established. Accordingly, the denial of input tax deduction was justified under the Kittel principle.

Citation
[2023] UKFTT 211
Parties
Appellant: Vortex Enterprises Limited; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
21 December 2022
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax) Judgment
Outcome
Appeal dismissed
Legal Topics
Value Added Tax, Input Tax Deduction, MTIC Fraud, Kittel Principle, Due Diligence, Contra Trading
Tax Law European Union Law Value Added Tax Input Tax Deduction MTIC Fraud Kittel Principle Due Diligence Contra Trading

Case Brief

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Parties

Vortex Enterprises Limited

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the appellant knew or should have known that its purchases were connected with the fraudulent evasion of VAT (MTIC fraud)
  2. 2 Whether the denial of input tax deduction was justified under the Kittel principle

Ratio Decidendi

On the balance of probabilities, the Tribunal found that the appellant knew its purchases were connected with the fraudulent evasion of VAT, or at the very least, should have known of that connection. The appellant failed to carry out adequate due diligence despite repeated warnings and advice, and the structure and circumstances of the transactions were such that knowledge or willful blindness was established. Accordingly, the denial of input tax deduction was justified under the Kittel principle.

Court Disposition

Appeal dismissed

Orders

  • The appellant's appeal against the denial of input tax deduction is dismissed.