VAT Input Tax Denial Under Kittel Principle – Appeals Allowed Against HMRC

• The FTT allowed appeals by SK Metals Ltd and Spencer Feldman against HMRC decisions to deny input VAT recovery under the Kittel principle and impose penalties
• The court found that SK Metals neither knew nor ought to have known that its transactions with B Trade Limited were connected with fraudulent VAT evasion
• While some factors suggested risk of fraud including trading with a new entity and inadequate due diligence, these were not sufficient to conclude the company should have known about fraud
• The court determined there were reasonable explanations for the transactions and the company did not ignore obvious inferences from the circumstances
• Therefore the input tax denials were improper, the penalty should not have been charged, and the personal liability notice against Spencer Feldman was invalid

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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