Deos Group Wins Appeal: FTT Overturns HMRC’s VAT Fraud Allegations Under Kittel Principle

• The FTT allowed an appeal by Deos Group.Co.UK Ltd against HMRC’s decision to deny input VAT recovery under the Kittel principle.
• HMRC could not prove that Deos Group knew or should have known about the VAT fraud.
• Deos Group was a small business dealing in office equipment and later in wholesale consumer electronics.
• HMRC raised a Kittel disallowance on 18 purchases from a single supplier in 2022, along with a penalty.
• The case focused on whether Deos Group knew or should have known about the fraud.
• The FTT examined direct evidence of knowledge, suspicious circumstances, and whether a reasonable businessperson would have known about the fraud.
• The FTT found the direct evidence of knowledge unpersuasive.
• The circumstances of the purchases were not suspicious enough to infer knowledge of fraud.
• The transactions had a reasonable explanation other than a connection with VAT fraud.
• The appeal was allowed.

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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