FTT Applies Kittel Principle to Partial VAT Denial in Sweetmotion Case

The FTT partially allowed Sweetmotion Ltd’s appeal, denying input VAT only from 19 January 2021 and requiring HMRC to recalculate penalties.
The case applied the Kittel principle: input tax can be refused if a taxpayer knew or should have known the transactions were connected to VAT fraud.
The FTT found Mr Jenkins did not initially know about the fraud, but after an HMRC meeting on 19 January 2021 he should have been aware of it.
HMRC was criticised for not promptly raising concerns once it knew the suppliers’ identities.
Penalties were reduced by 25% due to the appellant’s and Mr Jenkins’ cooperation.

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.