Inadequate reasons for rejecting the taxpayer’s explanation

The taxpayer appealed against HMRC’s refusal to credit for input tax on goods bought from PPSM in the period March 2015 to January 2016. It said the deals were involved in missing trader intra-community fraud and that the company knew or should have known about this.

The First-tier Tribunal dismissed the taxpayer’s appeal. The taxpayer appealed to the Upper Tribunal on the basis it could not have known about the fraud and the First-tier Tribunal had not provided an adequate explanation for its conclusion in this respect.

The Upper Tribunal noted that the lower tribunal had not given any ‘express reasons’ as to why it dismissed the company’s explanation. HMRC said the reasoning was ‘perfectly clear’ – the tribunal found that the company should have been on notice of the risk of fraud and it should have read VAT Notice 726. Had it done it would have been aware of the...