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The taxpayer company claimed repayment of input tax. HMRC refused on the grounds the tax arose from transactions connected with missing trader intra- community (MTIC) fraud about which the business had known or should have known.

The taxpayer appealed.

During the First-tier Tribunal (FTT) hearing it was accepted by all parties that the transactions were connected with fraudulent evasion of VAT. The tribunal held that the sole director of the company should have known the transactions were so connected. The case was dismissed.

The taxpayer appealed saying the FTT had misdirected itself and erred in law. The issue before the Upper Tribunal was whether the company knew or should have known that the transactions were fraudulent.

The judge said the business tried to isolate small points in the evidence and build a case on the basis they made a difference to the lower tribunal’s view of the...