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Fraudulent transactions

30 April 2015
Categories: Tax cases , missing trader intra-community fraud , VAT

Fraudulent transactions: S&I Electronics plc v CRC, Upper Tribunal

The taxpayer company bought and sold mobile phones. HMRC refused its claim to recover input tax on 90 out of 99 phones on the ground the items had been bought from a person who had fraudulently evaded VAT and the taxpayer knew or ought to have known that the transactions were connected with fraud.

The First-tier Tribunal (FTT) allowed the taxpayer’s appeal in part concluding that 79 transactions had been connected with fraud while HMRC had not proved the connection to fraud in the other 11 transactions.

The taxpayer appealed.

The Upper Tribunal said the FTT had to be satisfied that the taxpayer should have known the only reasonable explanation for the transactions had been a connection with fraud and that they had been so connected.

The only reasonable and objective explanation in this instance for the 79 transactions was they had been...

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