Errors in law

The taxpayer reclaimed input tax on the purchase of large quantities of mobile telephones. HMRC rejected the claims on the basis that the transactions were connected to missing trader intra-community fraud.

The First-tier Tribunal accepted the taxpayer’s argument that it did not know, and could not reasonably be expected to have known, that the transactions had been connected with fraud.

HMRC appealed.

The Upper Tribunal concluded that the First-tier Tribunal had made errors in law in reaching its decision. It had taken into account an irrelevant consideration relating to one of the company’s owners not being the subject of a criminal investigation. It had not assessed the circumstantial evidence as a whole and had not given proper reasons for rejecting HMRC’s alternative arguments.

The First-tier Tribunal decision was set aside and the case remitted to a differently constituted tribunal for determination.

HMRC’s appeal was allowed.

Issue: 4527 / Categories: Tax cases , Admin