UK Computer Supplies Ltd Denied Input VAT Recovery Due to Should-Have-Known Connection to MTIC Fraud

• The FTT dismissed UK Computer Supplies Ltd’s appeal against HMRC’s decision to deny input VAT recovery.
• The denial was based on the Kittel principle due to VAT fraud through MTIC fraud.
• UKCSL accepted VAT losses but disputed the fraud connection and their knowledge of it.
• The FTT found UKCSL did not have actual knowledge of the fraud.
• However, UKCSL should have known the transactions were connected to VAT fraud.
• UKCSL was aware of HMRC guidance on spotting fraud but ignored red flags.
• No due diligence or credit checks were conducted on involved parties.
• The FTT concluded the only credible explanation for the transactions was their connection to VAT fraud.
• UKCSL’s explanation of their role as a value-added reseller was deemed not reasonable or credible.

Source: claritaxnews.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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