Upper Tribunal Upholds Kittel VAT Fraud Denial in RS Global v HMRC

• The Upper Tribunal held that RS Global “knew or should have known” its transactions were linked to VAT fraud under the Kittel principle.
• RS Global, a recruitment business using outsourced payroll providers, lost input VAT recovery and faced penalties after HMRC said the providers were involved in fraud.
• The First-tier Tribunal found no actual knowledge, but ruled the company should have known because due diligence was weak, dealings continued with fraudulent counterparties, and the director was aware of VAT fraud risks.
• The Upper Tribunal upheld that ruling and confirmed HMRC does not need to prove dishonesty to deny input VAT recovery.

Source: assets.publishing.service.gov.uk

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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