- The FTT partly allowed Big and Small Construction Ltd’s appeal against HMRC’s denial of input VAT under the Kittel principle, and fully allowed its appeal against the penalty.
- The tribunal accepted that VAT fraud existed and that the company’s labour supplies were connected to that fraud, but found no actual or blind-eye knowledge by the director.
- For most suppliers, the FTT found nothing that should have alerted the company to fraud and no general duty from HMRC to carry out broad due diligence absent warning signs.
- The only problem supplier was A-Z, where duplicated UTR/VAT numbers on invoices should have prompted checks; proper enquiries would likely have revealed fraud.
- As a result, input VAT was denied only for A-Z supplies in VAT periods 12/19 and 03/20, and the related penalty was overturned.
Source: claritaxnews.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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