Upper Tribunal Upholds HMRC’s Deregistration of Mini-Umbrella Companies for VAT Fraudulent Use

• Appeal involved mini-umbrella companies and VAT issues.
• HMRC deregistered appellants from VAT and denied VAT Flat Rate Scheme and Employment Allowance due to suspected fraud.
• First-tier Tribunal dismissed appellants’ appeal but stated HMRC needed proof of directors’ knowledge of fraud for deregistration.
• Appellants appealed to Upper Tribunal; HMRC cross-appealed on Ablessio principle.
• Upper Tribunal dismissed appellants’ appeal and allowed HMRC’s cross-appeal.
• Upper Tribunal upheld HMRC’s actions based on evidence of fraudulent use of VAT numbers.
• Decision emphasizes HMRC’s ability to challenge VAT schemes using structural design and evidence.
• New changes from April 2026 will make recruitment agencies responsible for correct tax on workers’ wages with umbrella companies.

Source: rpclegal.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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