Wireless Wizards Ltd v Revenue & Customs [2013] UKFTT 680 (TC) (22 November 2013)

Wireless Wizards Ltd v Revenue & Customs [2013] UKFTT 680 (TC) (22 November 2013)

Wireless Wizards should have known that its transactions were connected with VAT fraud. The combination of industry knowledge, prior warnings from HMRC, the artificial and non-commercial nature of the deals, and failure to conduct basic due diligence meant that a reasonable business person in their position would have been put on notice and required to investigate further. Their failure to do so, whether through naivety, recklessness, or intentional ignorance, satisfies the legal test for denial of input VAT repayment under the Kittel and Mobilx principles.

Citation
[2013] UKFTT 680 (TC)
Parties
Appellant: Wireless Wizards Limited; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
22 November 2013
Procedural Posture
VAT Appeal (first Tier Tribunal Tax) / Final Judgment After Full Hearing
Outcome
Appeal dismissed
Legal Topics
Value Added Tax (vat), Missing Trader Intra Community (mtic) Fraud, Input Tax Repayment, Constructive Knowledge of Fraud, Due Diligence in VAT Chains
Tax Law European Union Law Value Added Tax (vat) Missing Trader Intra Community (mtic) Fraud Input Tax Repayment Constructive Knowledge of Fraud Due Diligence in VAT Chains

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Parties

Wireless Wizards Limited

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

VAT Appeal (first Tier Tribunal Tax) / Final Judgment After Full Hearing

Legal Issues

  1. 1 Whether the appellant knew or should have known that its transactions were connected with VAT fraud
  2. 2 Whether HMRC was correct to deny input VAT repayment on the basis of connection to fraud

Ratio Decidendi

Wireless Wizards should have known that its transactions were connected with VAT fraud. The combination of industry knowledge, prior warnings from HMRC, the artificial and non-commercial nature of the deals, and failure to conduct basic due diligence meant that a reasonable business person in their position would have been put on notice and required to investigate further. Their failure to do so, whether through naivety, recklessness, or intentional ignorance, satisfies the legal test for denial of input VAT repayment under the Kittel and Mobilx principles.

Court Disposition

Appeal dismissed

Orders

  • Input VAT repayment of £1,039,086.20 denied to Wireless Wizards Limited for VAT period 04/06
  • Costs awarded to HMRC, to be assessed if not agreed