“A person who has no intention of undertaking an economic activity but pretends to do so in order to make off with the tax he has received on making a supply, either by disappearing or hijacking a taxable person’s VAT identity, does not meet the objective criteria which form the basis of those concepts which limit the scope of VAT and the right to deduct......A taxable person who knows or should have known that the transaction which he is undertaking is connected with fraudulent evasion of VAT is to be regarded as a participant and, equally, fails to meet the objective criteria which determine the scope of the right to deduct.”
“It is plain that if HMRC wishes to assert that a trader’s state of knowledge was such that his purchase is outwith the scope of the right to deduct it must prove that assertion.”
“the time has come to say, once and for all, that there is only one civil standard of proof, and that is proof that the fact in issue more probably occurred than not.”
“The denial of the right to deduct in this case stems from the principles which apply throughout the Community in respect of what is said to be reliance on Community law for fraudulent ends. It can be no objection to that approach to Community law that in purely domestic circumstances a trader might not be regarded as an accessory to fraud.”
“The [ECJ] must have intended the phrase “knew or should have known” which it employs in paras 59 and 61 of Kittel to have the same meaning as the phrase “knowing or having the means of knowing” which it used in Optigen (para 55) (para 51 Mobilx).”
“If a trader should have known that the only reasonable explanation for the transaction was that it was connected with fraud and it turns out that the transaction was connected with fraudulent of evasion of VAT then he should have known of that fact.”
“this type of fraud is not confined to the United Kingdom. It is common in other countries within the EU. It has been a sophisticated attack on the VAT system. It was estimated to have cost in excess of£1bn in the year 2004/2005 to the United Kingdom by way of lost revenue. The Commissioners refer in their written case to estimates that show that this figure was exceeded substantially in the succeeding financial years. There is no doubt that this is a pernicious stratagem, and that member states are justified in making use of every means at their disposal within the scope of the Sixth Directive to eradicate it.”
“In our judgment, it would be difficult to find more compelling evidence of [the Director of Regent’s] knowledge of involvement in pre-arranged and contrived transactions than that of [the Officer that found circularity in Regent’s payments].”
“ The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence.”