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 transactions were connected with the fraudulent evasion of VAT, and even if not, it should have known. The appellant's due diligence was inadequate, the deal chains exhibited features of MTIC fraud, and the appellant failed to provide credible evidence to rebut HMRC's case. Therefore, the denial of input VAT recovery was upheld.

Citation
[2023] UKFTT 211 (TC)
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

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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) and is therefore denied the right to deduct input VAT under the Kittel principle.

Ratio Decidendi

On the balance of probabilities, the Tribunal found that the appellant knew its transactions were connected with the fraudulent evasion of VAT, and even if not, it should have known. The appellant's due diligence was inadequate, the deal chains exhibited features of MTIC fraud, and the appellant failed to provide credible evidence to rebut HMRC's case. Therefore, the denial of input VAT recovery was upheld.

Court Disposition

Appeal dismissed

Orders

  • Denial of input VAT recovery for the relevant periods is upheld.
  • No order as to costs.