UK Tribunal Restores VAT Credits to Scrap Metal Firm Despite Lax Due Diligence and Fraud Risks

• HMRC denied GMP Baird Ltd input tax credits, alleging the company knew or should have known its scrap metal purchases were linked to VAT fraud.
• The company had been repeatedly warned about fraud risks and due diligence requirements but conducted only minimal checks.
• Despite poor due diligence and trading with flagged suppliers, the tribunal found the company did not actually know or have means of knowing about the fraud.
• The tribunal noted that even HMRC was unaware of the frauds during the relevant periods and that no reasonable due diligence would have uncovered them.
• The appeals were allowed, and the denied input tax credits were restored to the company.

Source: bailii.org

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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