Court Upholds HMRC’s Power to Deregister ICSL for VAT Fraud Facilitation Involving MUCs

• Impact Contracting Solutions Limited used 3300 mini-umbrella companies to supply labor.
• HMRC found the arrangements between ICSL and the MUCs to be contrived.
• MUCs failed to account for VAT charged on supplies to ICSL.
• HMRC denied ICSL the right to recover VAT due to fraudulent evasion.
• HMRC informed ICSL of VAT registration cancellation for facilitating fraud.
• ICSL appealed against the denial of input tax recovery and deregistration.
• ICSL argued Ablessio applies only to those defaulting on their own obligations.
• Court of Appeal ruled HMRC can deregister those involved in VAT fraud.
• Deregistration must be proportionate and not breach EU VAT principles.
• ICSL’s appeal on the preliminary issue of law was dismissed.
• Further consideration needed on whether ICSL’s circumstances justify deregistration.

Source: taxscape.deloitte.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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