Upper Tribunal Rules on Mini-Umbrella Company Fraud and VAT Deregistration Appeal

• The Upper Tribunal issued a decision on mini-umbrella companies and their use of the VAT flat rate scheme and employment allowance.
• Thousands of other appeals are on hold pending the outcome of these lead cases.
• HMRC deregistered the MUCs from VAT, claiming they were not entitled to use the FRS and EA due to fraud.
• The First-tier Tribunal found HMRC had objective grounds to suspect fraud but could not prove the MUC directors knew of it.
• The FTT ruled HMRC could not deregister the MUCs but supported denying them the FRS and EA benefits.
• Both HMRC and the MUCs appealed the FTT decision.
• The Upper Tribunal found HMRC did not need to prove the directors’ knowledge of fraud to deregister the MUCs.
• The UT agreed with the FTT on denying the FRS and EA benefits.
• HMRC’s appeal was upheld, and the MUCs’ appeal was dismissed.

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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