The City Court upheld the denial of VAT and tax deductions for expenses related to subcontractors, finding that the transactions lacked substance. Evidence showed that most of the subcontractors had been deregistered, and several others lacked sufficient employees to actually perform the contracted work. Furthermore, the taxpayer failed to provide any correspondence demonstrating a genuine working relationship with the subcontractors. Consequently, the court ruled to increase the taxpayer’s VAT liability and taxable income due to these unsupported deductions. This decision confirms that the taxpayer could not substantiate the costs claimed from the subcontractors.
Source: news.bloombergtax.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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