First-tier Tribunal’s approach to missing trader intra community fraud

The taxpayer’s business included the supply of promotional goods such as stickers bags and mouse mats to companies. It made six purchases of memory sticks from a single suppler and sold them in five transactions to a company in Spain. It claimed input tax on these items. HMRC refused the claim on the basis that the company knew or should have known that the purchases were connected with the fraudulent evasion of VAT.

The First-tier Tribunal allowed the taxpayer’s appeal holding that the director did not know and should not have known that the transactions were connected with fraud. HMRC appealed.

The Upper Tribunal agreed with HMRC’s first ground of appeal – that the First-tier Tribunal’s reasoning was inadequate. The judges said no one reading the decision would realise that HMRC’s case was that aspects of the transactions gave rise to an inference...