UK Tribunal Overturns VAT Fraud Penalty, Clarifies Input VAT Deduction Rights for Taxpayer

The UK First-Tier Tax Tribunal clarified rules on input VAT deductions in a case involving a waste metal broker.
HMRC denied the broker’s input VAT claim and held the director personally liable for a VAT fraud penalty.
The Tribunal found the taxpayer could have suspected VAT fraud risk due to sector risks and suspicious invoices.
However, the Tribunal decided the taxpayer did not actually know, nor should have known, about the fraud connection.
The denial of the VAT deduction and the penalty against the director were found to be incorrect.

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.