Xentric Ltd v Revenue & Customs [2010] UKFTT 620 (TC) (01 December 2010)

Xentric Ltd v Revenue & Customs [2010] UKFTT 620 (TC) (01 December 2010)

The Tribunal found that all the chains in which Xentric participated were connected with fraudulent evasion of VAT. Xentric’s compliance with Notice 726 and its overall duty of responsible enquiry were not adequate for an honest trader in the market. The Tribunal was satisfied that Xentric, through Mr Olin, ought to have known that its transactions were connected to fraud. Therefore, Xentric was not entitled to deduct the input tax claimed.

Citation
[2010] UKFTT 620 (TC)
Parties
Appellant: Xentric Limited; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
01 December 2010
Procedural Posture
VAT Input Tax Appeal / First Tier Tribunal (tax) Decision
Outcome
Appeal dismissed
Legal Topics
VAT, Input Tax Deduction, MTIC Fraud, Contra Trading, Standard of Proof
Tax Law European Union Law VAT Input Tax Deduction MTIC Fraud Contra Trading Standard of Proof

Case Brief

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Parties

Xentric Limited

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether Xentric Limited was entitled to deduct input tax under VAT law for the relevant periods.
  2. 2 Whether the transactions were connected with the fraudulent evasion of VAT (MTIC fraud).
  3. 3 Whether Xentric knew or ought to have known of the connection to fraud.

Ratio Decidendi

The Tribunal found that all the chains in which Xentric participated were connected with fraudulent evasion of VAT. Xentric’s compliance with Notice 726 and its overall duty of responsible enquiry were not adequate for an honest trader in the market. The Tribunal was satisfied that Xentric, through Mr Olin, ought to have known that its transactions were connected to fraud. Therefore, Xentric was not entitled to deduct the input tax claimed.

Court Disposition

Appeal dismissed

Orders

  • Input tax claims for periods 04/06 and 05/06 refused.
  • No order as to costs specified.