- Impact Contracting Solutions used 3,300 mini umbrella companies (MUCs) to provide services, some of which disappeared without paying VAT or PAYE.
- HMRC denied Impact Contracting Solutions the right to recover VAT from the defaulting MUCs, but HMRC invoked the Ablessio principle and deregistered Impact Contracting Solutions for VAT as its registration was being used to facilitate fraud.
- Impact Contracting Solutions argued that Ablessio should not override the clear obligation for it to be registered for VAT.
- However, the Upper Tribunal ruled that Ablessio is a free-standing principle and applies to facilitators who knew or should have known about fraud by the MUCs.
- Impact Contracting Solutions’ appeal was dismissed, and it must now convince the FTT that HMRC’s deregistration was not appropriate based on its own facts.
Source Deloitte
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