Crucial connection

HMRC refused the taxpayer company’s claim for input tax in respect of 93 transactions involving the purchase and export of mobile telephones. The department said the deals were connected with missing trader intra-community fraud about which the taxpayer should have known or had known.

The First-tier Tribunal agreed with the Revenue and the taxpayer appealed.

The Upper Tribunal said the taxpayer had “not come close to discharging the heavy burden of displacing findings of fact” made by the first tribunal – which had had not misapplied the test in Axel Kittel v Belgium and Belgium v Recolta Recycling SPRL (C-439/04 and C-20 440/04).

The judge said it was settled law that the objective criteria that determine the scope of VAT and the right to deduct are not only met when it is shown that the taxable person intends to evade tax but also when that person knew or should...