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Has the Kittel boiled dry?
Tax practitioners involved with HMRC disputes will be well aware of the department’s widespread and increasingly aggressive use of the ‘Kittel principle’ when tackling VAT frauds particularly against traders in a supply chain of transactions. The trader will themselves have not perpetrated any such fraud but HMRC instead seeks to recover the missing VAT on a joint and several liability basis from them. Those who are well versed in HMRC’s VAT fraud challenges will understand that the fraud in question is usually committed by a distinctly separate trader somewhere earlier in the supply chain with HMRC seeking to deny input tax on transactions within the chain.
The difficulty in defending a Kittel challenge as many practitioners will also know is that the basis of the test is that the trader ‘knew’ or ‘should have known’ about fraud in the...
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