HMRC raised two types of assessments. The first, referred to as the Kittel assessments, where input tax is disallowed under the Kittel principle (paras 8 – 11) i.e. the relevant transactions were connected with a scheme to defraud the Treasury of VAT, and the taxpayer knew, or should have known, that this was the case.
The second Mecsek assessments, were output tax assessments under Mecsek principle – denial of zero rating on the sales (paras 12-15) again on the basis that the relevant transactions were connected with a scheme to defraud the Treasury of VAT, and the taxpayer knew, or should have known, that this was the case.
Source KPMG
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