UK Tribunal Rules on VAT Fraud and De-registration of Mini-Umbrella Companies

Elphysic Limited & Ors v HMRC ([2025] UKUT 236 (TCC)):

• VAT Deregistration Upheld Without Director Knowledge: The Tribunal ruled that HMRC can deregister companies for VAT under the Ablessio principle even if the directors did not know or should not have known about the fraud, focusing instead on the fraudulent use of VAT numbers.
• Flat Rate Scheme and Employment Allowance Denied: The appellants, operating as mini-umbrella companies (MUCs), were found ineligible for the VAT Flat Rate Scheme and Employment Allowance due to their association with a fraudulent scheme designed to exploit tax benefits.
• Pleading Standards and Fraud Allegations Scrutinized: While HMRC did not identify specific individuals as fraudsters, the Tribunal found the overall scheme to be fraudulent based on cumulative evidence, and emphasized that detailed pleading of individual dishonesty was not required to establish abuse under VAT law.

Sources:

• bailii.org
• gov.uk

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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