SK Metals Ltd v HMRC: VAT Input Tax Deductibility and MTIC Fraud Knowledge

• SK Metals Limited and Spencer Feldman appealed against HMRC decisions denying input tax deductions totaling over £614,000 for scrap metal purchases from B Trade Limited during VAT periods 02/21 to 08/21
• HMRC also imposed a penalty of £184,999 under section 69C VATA and made Spencer Feldman personally liable for the penalty under section 69D VATA
• The central issue was whether HMRC properly denied the input tax deductions based on the principle that SKM knew or should have known the transactions were connected with fraudulent VAT evasion
• The case involved Missing Trader Intra Community fraud and the application of Kittel principles regarding knowledge of fraud in VAT transactions
• The appeals were allowed by the First-tier Tribunal Tax Chamber following a hearing in September 2025

Source: bailii.org

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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