“(a) HMRC have not established or provided particulars of the alleged or any fraudulent evasion of VAT (“the fraud”) or any connection of the fraud with transactions entered into by the Appellant; (b) HMRC have not established or provided particulars of the loss of VAT; (c) the Appellant did not have knowledge of the fraud; (d) the Appellant did not have the means to knowing that its transactions were connected with the fraud. Further, the Appellant did not have at its disposal the means such that it should have known that its transactions were connected with the fraud.”
“[54] As the court has already observed, preventing tax evasion, avoidance and abuse is an objective recognised and encouraged by the Sixth Directive (see Gemeente Leusden v Staatssecretaris van Financien (Cases C-487/01 and C-7/02)[2007] STC 776 , [2004] ECR 1-5337, para 76). Community law Cannot be relied on for abusive or fraudulent ends (see, inter alia, Kefalas v Greece and OAE (Case C-367/96 ) [1998] ECR 1-2843, para 20; Case Diamantis v Greece (Case C-373/97 ) [2000] ECR 1-1705, para 33; and IIS Fini H v Skatteministeriet (Case C-32/03 )[2005] STC 903 ,[2005] ECR 1-1599, para 32). [55] Where the tax authorities find that the right to deduct has been exercised fraudulently, they are permitted to claim repayment of the deducted sums retroactively (see, inter alia, Rompelman v Minister van Financien (Case 268/83) [1985] ECR 655 , para 24 ; Intercornmunale voor Zeewaterontzilting (in liquidation) v Belgium (Case C-110/94 )[1996] STC 569 , [1996] ECR 1-857, para 24; and Gabalfrisa (para 46)). It is a matter for the national court to refuse to allow the right to deduct where it is established, on the basis of objective evidence, that that right is being relied on for fraudulent ends (see Fini H (para 34)). [56] In the same way, a taxable person who knew or should have known that, by his purchase, he was taking part in a transaction connected with fraudulent evasion of VAT must, for the purposes of the Sixth Directive, be regarded as a participant in that fraud, irrespective of whether or not he profited by the resale of the goods. [57] That is because in such a situation the taxable person aids the perpetrators of the fraud and becomes their accomplice. [58] In addition, such an interpretation, by making it more difficult to carry out fraudulent transactions, is apt to prevent them. [59] Therefore, it is for the referring court to refuse entitlement to the right to deduct where it is ascertained, having regard to objective factors, that the taxable person knew or should have known that, by his purchase, he was participating in a transaction connected with fraudulent evasion of VAT, and to do so even where the transaction in question meets the objective criteria which form the basis of the concepts of 'supply of goods effected by a taxable person acting as such' and 'economic activity'. [60] It follows from the foregoing that the answer to the questions must be that where a recipient of a supply of goods is a taxable person who did not and could not know that the transaction concerned was connected with a fraud committed by the seller, art 17 of the Sixth Directive must be interpreted as meaning that it precludes a rule of national• law under which the fact that the contract of sale is void—by reason of a civil law provision which renders that contract incurably void as contrary to public policy for unlawful basis of the contract attributable to the seller—causes that taxable person to lose the right to deduct the VAT he has paid. It is irrelevant in this respect whether the fact that the contract is void is due to fraudulent evasion of VAT or to other fraud. [61] By contrast, where it is ascertained, having regard to objective factors, that the supply is to a taxable person who knew or should have known that, by his purchase, he was participating in a transaction connected with fraudulent evasion of VAT, it is for the national court to refuse that taxable person entitlement to the right to deduct.”
“[29] The tribunal started by setting out the four questions they considered that they must answer. It is common ground that they were the correct questions. They were: (1) Was there a VAT loss? (2) If so, did this loss result from a fraudulent evasion? (3) If there was a fraudulent evasion, were the BSG transactions the subject of this appeal connected with that evasion? (4) If such a connection was established, should BSG have known that its purchases were connected with a fraudulent evasion of VAT?”
“Returning to Reg. v. Fairclough ,25 October 1982 , as we have seen, the direction in that case was approved by the Court of Appeal (Criminal Division). There was nothing there about the need of an intention to make permanent default. The way it was being put by the judge to the jury in the present case was that if the person concerned knows that the time has come to send in the VAT returns but deliberately does not do so because he does not want to pay the tax, then from that moment onwards he is in law evading the tax. We see nothing basically different between that direction and the direction given by the judge in Reg. v. Fairclough . As we have already indicated, we believe that we are bound by Reg. v. Fairclough . We are indeed perfectly happy to acknowledge it. Why ever should the Crown have to prove a permanent intention to deprive? The legislature are perfectly capable of putting those words in a statute if they want to. To imply the words would only add to the difficulties of the prosecution in proving their case. They would constantly have to meet suggestions that there was an intention to pay in the end, just as there was here, even though we are bound to say that the case for the prosecution was overwhelming. Why should such words be implied? The word “evasion” does not, to our mind, imply any sense of permanence.”
“[74] These several considerations provide convincing grounds for holding that the second leg of the test propounded in Ghosh does not correctly represent the law and that directions based upon it ought no longer to be given. The test of dishonesty is as set out by Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan and by Lord Hoffmann in Barlow Clowes : see para 62 above. When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
“Meaning of ‘should have known’ [50] The traders contend that mere failure to take reasonable care should not lead to the conclusion that a trader is a participant in the fraud. In particular, counsel on behalf of Mobilx contends that Floyd J and the tribunal misconstrue para 51 of Kittel. Whilst traders who take every precaution reasonably required of them to ensure that their transactions are not connected with fraud cannot be deprived of their right to deduct input tax, it is contended that the converse does not follow. It does not follow, they argue, that a trader who does not take every reasonable precaution must be regarded as a participant in fraud. [51] Once it is appreciated how closely Kittel follows the approach the court had taken six months before in Optigen , it is not difficult to understand what it meant when it said that a taxable person 'knew or should have known' that by his purchase he was participating in a transaction connected with fraudulent evasion of VAT. In Optigen the court ruled that despite the fact that another prior or subsequent transaction was vitiated by VAT fraud in the chain of supply, of which the impugned transaction formed part, the objective criteria, which determined the scope of VAT and of the right to deduct, were met. But they limited that principle to circumstances where the taxable person had 'no knowledge and no means of knowledge'(para 55). The court must have intended Kittel to be a development of the principle in Optigen . Kittel is the obverse of Optigen . The court must have intended the phrase 'knew or should have known' which it employs in paras 59 and 61 in Kittel to have the same meaning as the phrase 'knowing or having any means of knowing which it used in Optigen (para 55). [52] If a taxpayer has the means at his disposal of knowing that by his purchase, he is participating in a transaction connected with fraudulent evasion of VAT he loses his right to deduct, not as a penalty for negligence, but because the objective criteria for the scope of that right are not met. It profits nothing to contend that, in domestic law, complicity in fraud denotes a more culpable state of mind than carelessness, in the light of the principle in Kittel. A trader who fails to deploy means of knowledge available to him does not satisfy the objective criteria which must be met before his right to deduct arises. Extent of Knowledge … [58] As I have endeavoured to emphasise, the essence of the approach of the court in Kittel was to provide a means of depriving those who participate in a transaction connected with fraudulent evasion of VAT by extending the category of participants and, thus, of those whose transactions do not meet the objective criteria which determine the scope of the right to deduct. The court preserved the principle of legal certainty; it did not trump it. [59] The test in Kittel is simple and should not be over-refined. It embraces not only those who know of the connection but those who 'should have known'. Thus it includes those who should have known from the circumstances which surround their transactions that they were connected to fraudulent evasion. If a trader should have known that the only reasonable explanation for the transaction in which he was involved was that it was connected with fraud and if it turns out that the transaction was connected with fraudulent evasion of VAT then he should have known of that fact. He may properly be regarded as a participant for the reasons explained in Kittel . [60] The true principle to be derived from Kittel does not extend to circumstances in which a taxable person should have known that by his purchase it was more likely than not that his transaction was connected with fraudulent evasion. But a trader may be regarded as a participant where he should have known that the only reasonable explanation for the circumstances in which his purchase took place was that it was a transaction connected with such fraudulent evasion. … Questions of Proof [81] HMRC raised in writing the question as to where the burden of proof lies. 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. No sensible argument was advanced to the contrary. [82] But that is far from saying that the surrounding circumstances cannot establish sufficient knowledge to treat the trader as a participant. As I indicated in relation to the BSG appeal, tribunals should not unduly focus on the question whether a trader has acted with due diligence. Even if a trader has asked appropriate questions, he is not entitled to ignore the circumstances in which his transactions take place if the only reasonable explanation for them is that his transactions have been or will be connected to fraud. The danger in focussing on the question of due diligence is that it may deflect a tribunal from asking the essential question posed in Kittel , namely, whether the trader should have known that by his purchase he was taking part in a transaction connected with fraudulent evasion of VAT. The circumstances may well establish that he was. [83] The questions posed in BSG (quoted above at para [72]) by the tribunal were important questions which may often need to be asked in relation to the issue of the trader's state of knowledge. I can do no better than repeat the words of Christopher Clarke J in Red 12 Trading Ltd v Revenue and Customs Comrs[2009] EWHC 2563 (Ch) at [109]-[111],[2010] STC 589 at [109]-[111]: ‘[109] Examining individual transactions on their merits does not, however, require them to be regarded in isolation without regard to their attendant circumstances and context. Nor does it require the tribunal to ignore compelling similarities between one transaction and another or preclude the drawing of inferences, where appropriate, from a pattern of transactions of which the individual transaction in question forms part, as to its true nature eg that it is part of a fraudulent scheme. The character of an individual transaction may be discerned from material other than the bare facts of the transaction itself, including circumstantial and "similar fact" evidence. That is not to alter its character by reference to earlier or later transactions but to discern it. [110] To look only at the purchase in respect of which input tax was sought to be deducted would be wholly artificial. A sale of 1,000 mobile telephones may be entirely regular, or entirely regular so far as the taxpayer is (or ought to be) aware. If so, the fact that there is fraud somewhere else in the chain cannot disentitle the taxpayer to a return of input tax. The same transaction may be viewed differently if it is the fourth in line of a chain of transactions all of which have -identical percentage mark ups, made by a trader who has practically no capital as part of a huge and unexplained turnover with no left over stock, and mirrored by over 40 other similar chains in all of which the taxpayer has participated and in each of which there has been a defaulting trader. A tribunal could legitimately think it unlikely that the fact that all 46 of the transactions in issue can be traced to tax losses to HMRC is a result of innocent coincidence. Similarly, three suspicious involvements may pale into insignificance if the trader has been obviously honest in thousands. [111] Further in determining what it was that the taxpayer knew or ought to have known the tribunal is entitled to look at the totality of the deals effected by the taxpayer (and their characteristics), and at what the taxpayer did or omitted to do, and what it could have done, together with the surrounding circumstances in respect of all of them.' [84] Such circumstantial evidence, of a type which compels me to reach a more definite conclusion than that which was reached by the tribunal in Mobilx , will often indicate that a trader has chosen to ignore the obvious explanation as to why he was presented with the opportunity to reap a large and predictable reward over a short space of time. In Mobilx , Floyd J concluded that it was not open to the tribunal to rely upon such large rewards because the issue had not been properly put to the witnesses. It is to be hoped that no such failure on the part of HMRC will occur in the future. [85] In so saying, I am doing no more than echoing the warning given in HMRC's VAT. Notice 726 in relation to the introduction of joint and several liability. In that Notice traders were warned that the imposition of joint and several liability was aimed at businesses who know who is carrying out the frauds, or choose to turn a blind eye (para 2.3). They were warned to take heed of any indications that VAT may go unpaid (pare 4.9). A trader who chooses to ignore circumstances which can only reasonably be explained by virtue of the connection between his transactions and fraudulent evasion of VAT, participates in that fraud and, by his own choice, deprives himself of the right to deduct input tax.”
“[37] In my judgment, there are likely to be many cases in which a participant in a sophisticated fraud is shown to have actual or blind-eye knowledge that the transaction in which he is participating is connected with that fraud, without knowing, for example, whether his chain is a clean or dirty chain, whether contra-trading is necessarily involved at all, or whether the fraud has at its heart merely a dishonest intention to abscond without paying tax, or that intention plus one or more multifarious means of achieving a cover-up while the absconding takes place. [38] Similarly, I consider that there are likely to be many cases in which facts about the transaction known to the broker are sufficient to enable it to be said that the broker ought to have known that his transaction was connected with a tax fraud, without it having to be, or even being possible for it to be, demonstrated precisely which aspects of a sophisticated multifaceted fraud he would have discovered, had he made reasonable inquiries. In my judgment, sophisticated frauds in the real world are not invariably susceptible, as a matter of law, to being carved up into self-contained boxes even though, on the facts of particular cases, including Livewire , that may be an appropriate basis for analysis. … It is important to bear in mind, although the phrase 'knew or ought to have known' slips easily off the tongue, that when applied for the purpose of identifying the state of mind of a person who has participated in a transaction which is in fact connected with a fraud, it encompasses two very different states of mind. A person who knows that a transaction in which he participates is connected with fraudulent tax evasion is a participant in that fraud. That person has a dishonest state of mind. By contrast, a person who merely ought to have known of the relevant connection is not dishonest, but has a state of mind broadly equivalent to negligence.”
“[43] I turn to my conclusions on this issue. Under the jurisprudence of the CJEU it is for the national court to determine if there was a connection on the facts, and this question is to be determined on the objective evidence and without reference to the trader's knowledge. [44] Furthermore in my judgment, there is nothing in Kittel which would lead to the conclusion that HMRC has to show that the transaction provides tangible assistance in carrying out the fraud. If it did, it would be difficult to prove a connection with a fraudulent transaction upstream of the transaction for which the trader seeks a repayment. Furthermore, contrary to the submission of Mr Lasok, there is no warrant for reading in a requirement that, in a contra-trading case, the connection can be established only by inclusion of details of the transaction in question in a VAT return submitted by (in this case) Klick. … [51] However, in my judgment, the holding of Moses LJ does not mean that the trader has to have the means of knowing how the fraud that actually took place occurred. He has simply to know, or have the means of knowing, that fraud has occurred, or will occur, at some point in some transaction to which his transaction is connected. The participant does not need to know how the fraud was carried out in order to have this knowledge. This is apparent from paras 56 and 61 of Kittel cited above. Paragraph 61 of Kittel formulates the requirement of knowledge as knowledge on the part of the trader that 'by his purchase he was participating in a transaction connected with fraudulent evasion of VAT'. It follows that the trader does not need to know the specific details of the fraud.”
“[65] Furthermore, in its case-law the Court requires that the taxable person takes part in a transaction ‘connected’ with fraudulent evasion of VAT. If no VAT fraud was planned at the time of import or at the time of transfer, there can be no question of participation in a transaction connected with fraudulent evasion of VAT. At that time there is no connection with a (planned) fraudulent evasion of VAT in the absence of intent on the part of the perpetrator. [66] In addition, the Court’s existing case-law on ‘transactions vitiated by fraud’ is manifestly geared to situations where - unlike in the present case - a VAT fraud was planned from the outset. It essentially relates to the area of organised (generally cross-border) crime. [67] The existence of a perpetrated or intended fraud, and thus fault in individual conduct at the time of the supply (here the transfer), constitutes a crucial element in refusing the perpetrator (and all ‘accomplices’, that is, anyone who knew or should have known about the fraud exemption and/or deduction.”
“[30] Fonecomp submits that its interpretation is confirmed by the way in which Kittel is applied in France but it has not made this submission good by adducing the appropriate evidence. Therefore, I can place no reliance on this point. '[62] The principle of legal certainty provides no warrant for restricting the connection, which must be established, to a fraudulent evasion which immediately precedes a trader's purchase. If the circumstances of that purchase are such that a person knows or should know that his purchase is or will be connected with fraudulent evasion, it cannot matter a jot that that evasion precedes or follows that purchase. That trader's knowledge brings him within the category of participant. He is a participant whatever the stage at which the evasion occurs.' [32] HMRC submits that we are therefore bound to conclude that the wider interpretation is correct. On this point, I prefer Mr Lasok's submission. I do not accept that we would be bound to follow Kittel if we considered that it was no longer good law simply because it had been approved in Mobilx. If we accept that Bonik changes the Kittel principle, then we would be bound to follow the later CJEU case law. [34] In conclusion, I agree with para [22] of the judgment of Judge Bishopp in Universal Enterprises (EU) Ltd v Revenue and Customs Comrs[2014] STC 1515 , cited by HMRC: [22] The argument that a trader in a clean chain cannot be affected by anything which happens in a dirty chain is in my judgment wholly misconceived. Mr Young argued that there is nothing inherently wrong with contra-trading, a statement which, put in that way, is true: a trader who both imports and exports may legitimately organise his sales and purchases so that, at the end of a VAT period, he has little to pay, or a repayment claim. If he does so for reasons of cash flow, his conduct is unexceptionable. But that is not the reason for the contra-trading seen in cases of this kind. As has been said many times, not least by the then Chancellor in Blue Sphere Global Ltd v Revenue and Customs Comrs[2009] EWHC 1150 (Ch) ,[2009] STC 2239 , its purpose is to conceal the fraud in the dirty chain and to make it harder to combat. The appellants' argument necessarily treats “clean” as synonymous with “innocent”, but a clean chain in cases of this kind—that is, one in which each of the traders accounts correctly for VAT—is not innocent; it is an integral part of the fraudulent scheme. Even if I entertained any doubt (which I do not) that as a matter of EU law there is sufficient connection between a trader in the clean chain and the default in the dirty chain, there remains an insuperable connection with the fraudulent purpose of the clean chain.'”
“(1) Is the exemption under Article 138 of [the VAT Directive] for an intra-Community transfer from a Member State to be refused where the taxable person carrying out that transfer to another Member State does in fact declare in the other Member State the intra-Community acquisition linked to the intra-Community transfer, but commits tax evasion in connection with a subsequent taxable transaction concerning the goods in the other Member State by wrongfully declaring an exempt intra-Community supply from that other Member State? (2) Is it relevant to the answer to Question 1 whether the taxable person had intended at the time of the intra-Community transfer to commit tax evasion in respect of a subsequent transaction concerning those goods?”
“[24] According to the referring court, it is apparent from the case-law of the Court of Justice that the right to VAT deduction or exemption in respect of an intra-Community supply is to be refused where tax evasion is committed by the taxable person himself. [25] In that regard, it notes that that case-law applies not only where the taxable person committed the offence of tax evasion but also where the taxable person knew or should have known that the transaction which he carried out was part of a tax fraud committed by the supplier or by another trader acting upstream or downstream in the supply chain. [26] The referring court is thus uncertain as to the relevance of that case-law in a situation such as that in the main proceedings, given that the tax evasion in question occurred only downstream in the supply chain, after the intra-Community transfer at issue and the intra-Community acquisition subsequent to that transfer. … [42] Once it has been established that that tax evasion does not relate to the transfer on which the right to the exemption from import VAT, as laid down in Article 143(d) of the VAT Directive and Article 143(1)(d) of the amended VAT Directive, depends was granted, that exemption cannot be denied to the importer designated or recognised as liable for payment of that tax, within the meaning of Article 201 of that directive, in a situation where, as is apparent from the order for reference, there is no evidence to support the conclusion that the importer knew or ought to have known that the supply subsequent to the import entailed tax evasion on the part of the Bulgarian recipients. [43] In the light of all the foregoing considerations, the answer to the first question is that Article 143(d) of the VAT Directive and Article 143(1)(d) of the amended VAT Directive must be interpreted as meaning that the exemption from import VAT laid down in those provisions may not be refused in respect of an importer designated or recognised as liable for payment of that tax, within the meaning of Article 201 of the VAT Directive, in a situation, such as that in the main proceedings, in which, first, the recipient of the intra-Community transfer of goods effected after that import commits tax evasion in connection with a transaction which is subsequent to that transfer and is not linked to that transfer and, secondly, there is no evidence to support the conclusion that the importer knew or ought to have known that that subsequent transaction entailed tax evasion on the part of the recipient.”
“[44] By its second question, the referring court asks what would be the implications, in the light of the answer to its first question, if it were established that the recipient of the goods transferred had intended, at the time of the intra-Community transfer of those goods, to commit tax evasion in respect of a subsequent transaction concerning the goods. [45] It is apparent from the order for reference that such an intention has not been established in the present case. In those circumstances, that question is hypothetical and therefore inadmissible.”
“[42] In both Optigen and Kittel the ECJ was concerned with carousel fraud, not contra-trading. In the former the principle was expressed in terms which confined its operation to transactions in the dirty chain and in terms which, if satisfied, excluded liability. By contrast in Kittel the principle was expressed in affirmative terms extending beyond transactions in the dirty chain. On that formulation all that is required is that the transaction in which the trader participated was 'connected with fraudulent evasion of VAT'. Just Fabulous (UK) Ltd also concerned a carousel fraud but was a strike out application not a consideration of how the concept of 'connection' is to be applied. The first reported case at the level of the ECJ or the High Court involving contra-trading is Livewire . … [44] There is force in the argument of counsel for BSG but I do not accept it. The nature of any particular necessary connection depends on its context, for example electrical, familial, physical or logical. The relevant context in this case is the scheme for charging and recovering VAT in the member states of the EU. The process of off-setting inputs against outputs in a particular period and accounting for the difference to the relevant revenue authority can connect two or more transactions or chains of transaction in which there is one common party whether or not the commodity sold is the same. If there is a connection in that sense it matters not which transaction or chain came first. Such a connection is entirely consistent with the dicta in Optigen and Kittel because such connection does not alter the nature of the individual transactions. Nor does it offend against any principle of legal certainty, fiscal neutrality, proportionality or freedom of movement because, by itself, it has no effect. [45] Given that the clean and dirty chains can be regarded as connected with one another, by the same token the clean chain is connected with any fraudulent evasion of VAT in the dirty chain because, in a case of contra-trading, the right to reclaim enjoyed by C (Infinity) in the dirty chain, which is the counterpart of the obligation of A to account for input tax paid by B, is transferred to E (BSG) in the clean chain. Such a transfer is apt, for the reasons given by the tribunal in Olympia[2009] STC 643 (at [4] quoted in [4], above), to conceal the fraud committed by A in the dirty chain in its failure to account for the input tax received from B. [46] Plainly not all persons involved in either chain, although connected, should be liable for any tax loss. The control mechanism lies in the need for either direct participation in the fraud or sufficient knowledge of it. It is important, as the tribunal recognised in para 131 of its decision, that such tax losses are only used once. Thus having used the tax losses attributable to AS Genstar and Wade Tech by allocation to the tax reclaimed by BSG they are no longer available to be allocated to other transactions or claims.”
“… the extent of the tax loss does not matter: there need be no correlation between input tax denied and tax lost.”
“[96] In my judgment there is no principle which requires HMRC to acknowledge a claim to repayment to the extent that the claim exceeds HMRC’s tax loss. Firstly, as Mr Cordara emphasised in other connections, the correct unit of fiscal analysis is not the entire chain but the individual transaction. This proposition was emphasised in both Optigen and Kittel ( supra ). The question is accordingly whether the taxpayer has or does not have the right to deduct or reclaim his input tax in respect of an individual transaction. Consideration of this question does not justify recourse to the overall fiscal impact on HMRC of all the transactions in the chain. [97] Secondly, none of the statements in Kittel suggest that the right is lost only to the extent that tax is lost elsewhere in the chain. It is true that measures adopted by Member States to combat MTIC fraud must be proportionate: see e.g. Netto ( supra ) at [18]‐[23]. Thus irrebuttable presumptions of illegality, for example, are not permitted: Garage Molenheide Joined Cases C‐286/94; C340/95; C‐401/95 and C‐47/96:[1998] STC 126 at [52]. But, once it is established that a taxpayer has, by his purchase, participated in the fraudulent evasion of VAT, it seems to me to be impossible to argue that, by withholding repayment of VAT in respect of that very purchase the taxpayer is being subjected to a disproportionate remedy. In fact, to use the VAT legislation to achieve any benefit from such a purchase seems to me to be wrong in principle. [98] Thirdly, although fiscal neutrality is a fundamental feature of the system of VAT, and the right of any trader to deduct input tax is an important feature of the system of ensuring fiscal neutrality (see e.g. Kittel at [48]), the fiscal neutrality of an individual transaction will, as Kittel shows, have to give way to the objective of combating fraud. [99] It seems to me that the objective of not recognising the right to repayment is not simply to ensure that the exchequer is not harmed by fraud: the objective includes combating fraud and discouraging taxpayers from entering into transactions of this nature. In that context, considerations of fiscal neutrality of the impugned transaction are, it seems to me, beside the point.”
“Crow is in no position to, therefore does not, dispute the fact of its suppliers having defaulted in complying with their VAT obligations subject to submissions on specific matters made below. Whether or not those defaults were dishonest and fraudulent is a matter for the Tribunal.”
“This sum relates to: · Sales made during October through December 2013, to your customers, Crow Metals Ltd and JED Logistics Ltd. A schedule of the invoices relating to these sales is enclosed with this letter. The schedule shows VAT due in the sum of£291,318.00 yet you have only declared output tax on the VAT return as£96,100.36 - a difference of£195,217.64 is due to HMRC. …”
“Given that nil returns were filed which understated sales, it is recognised that in SMD’s case the Tribunal may well find that it fraudulently evaded VAT. Crowe’s case is that it did not have the means to know that it would fraudulently evade VAT.”
“… By this time Mary had us worried sick, we did not know who to trust or trade with, we were sceptical of everyone.”
“Up to date copies of the following documents · VAT registration certificate of Company/Individual · Certificate of incorporation (for Companies only) · Annual return with full details of all directors and shareholders of company · For all directors and shareholders of companies and individuals/partners, need copies - Passport or driving licence - Utility bills verifying name and address · Trading address of company and all contact details · Utility bills for the company · Site visit required · Names and Address of Accountant. Reference to be requested confirming - Name of company supplying Crow Metals - Length accountant has acted - VAT returns are up to date and all VAT due has been paid”
“I met with Eric at his yard at the end of the working day. He rents a small yard on a busy industrial site in Gray’s Essex. On site there was scales, office payment window, forklift, bins, scrap metal for cleaning/processing, The yard was very well signed. Through chatting with Eric he said that he offered a collection service as well as having material delivered to the yard. I have known Eric for a few years and he used to sell to EMR/FJ Church/Benfleet Scrap.”