“… 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’.” ( Kittel at [59]). 164. Any denial of VAT input tax therefore requires (1) A tax loss (2) That tax loss to be as a result of fraudulent evasion of VAT (3) A connection between the fraudulent eveasion of VAT and the transactions on which input tax is denied (4) Where there is such a connection, a situation where the trader knoew or should have known that its transactions were connected with the fraudulent evasion of VAT. It is accepted that there was a tax loss in all deals and therefore it is not necessaru for us to consider that issue further. 165. We therefore have to consider: 166. In relation to GPSE, was it a fraudulent defaulting trader? 167. In relation to RHJ Ltd’s trade with CCL, was there a connection to CCL’s trade with GPSE? 168. In relation to CCL, did RHJ Ltd know, or should they have known, that the transactions RHJ Ltd entered into were connected to fraud? 169. In relation to BMC, was it a fraudulent defaulting trader? 170. In relation to BMC, did RHJ Ltd know, or should they have known, that the transactions RHJ Ltd entered into were connected to fraud? fraudulent evasion - GPSE 171. It is HMRC’s case that GPSE was a fraudulent defaulter. GPSE did not submit a tax return for its final period of trading, and has not paid over VAT due to HMRC which HMRC estimate to be over£600,000 . 172. Mr Thomson, in his witness statement, says ‘GPSE was identified as a potential new MTIC trader due to the fact that CCL had requested the clearance of this company through HMRC’s Wigan validation unit.’. 173. It is clear that once HMRC believes one company is involved in VAT fraud the (entirely proper) verification by that company of any VAT registration of another company places that second company under suspicion. 174. HMRC have produced very little evidence that GPSE was a fraudulent defaulter. Their case is that they de-registered GPSE as it was not present at its principal place of business. When they were notified of the change of location, provided with a plausible reason why the change of location occurred, and subsequently verified this location with a site visit, they did not re-register GPSE. Their reason for not re-registering was that there were other suspicious indicators such as suppliers were directly transporting goods to customers. 175. However the direct result of the removal of the VAT registration was that GPSE’s scrap metal business became extremely difficult to operate, as no reputable business in the industry would deal with a dealer who was not registered for VAT, as HMRC were telling all businesses in the industry to check VAT registrations. 176. HMRC’s case is that the failure to pay the final VAT due is as the result of fraud. Their case refers to a number of other companies who traded with GPSE and who may be fraudulent, but for the purposes of this case, we require evidence that GPSE was a fraudulent defaulter. 177. Mr Thomson of HMRC confirmed he did not make a decision that GPSE was a fraudulent defaulter. 178. That is of course not necessary in order for HMRC to prove to this Tribunal that GPSE was a fraudulent defaulter. However we have not seen any evidence that would point to fraud in this case, when weighed up against the other possibility for default which is that the business failed due to the removal of the VAT registration. connection - gpse 179. We turn now to the case of connection with fraud. Having decided that HMRC have not established to our satisfaction that GPSE was a fraudulent defaulter, we do not need to go on to consider the question of connection. However, on the assumption that there may be a fraudulent default somewhere before GPSE we go on to consider whether there is a connection between trades between GPSE Limited and CCL and onward sales from CCL to RHJ Ltd. 180. As there were only 6 deals in question we can look at each one of these in turn. 181. Before looking at the specifics of the disallowed deals, HMRC first took us to a set of deals between CCL and each of GPSE Ltd and RHJ Ltd in the earlier quarter. 182. We were shown 3 deals in this quarter. 183. The first was a sale from GPSE Ltd to CCL with an invoice date from GPSE of14 February 2013 . The goods were 28.340 tonnes of copper granules and a total cost excluding VAT of£134,898.40 . 184. CCL sold 28.357 tonnes of copper granules to RHJ Ltd with an invoice date of11 February 2013 . 185. The second deal is an invoice from GPSE to CCL on19 February 2013 . This invoice is for 3 items: 28.6 tonnes of tinned copper electrode, 290 kg of 98% heavy copper and 104kg of mixed brass. The invoice total is£132,029.66 . 186. There is a corresponding invoice from CCL to RHJ Ltd on the15 February 2013 for 104 kg of mixed brass, 28.602 tonnes of tinned copper electrode and 289 kg of 98% heavy copper. 187. The third deal was related to an invoice from GPSE dated28 February 2013 for 29.230 tonnes of dry bright and 50 kg of 98% heavy copper. There was then an invoice from CCL to RHJ on the1 March 2013 for 29.23 tonnes of dry bright copper wire and 50 kg of 98% heavy copper. 188. HMRC did not deny input tax in relation to any of the purchases from CCL in the 04/13 quarter due to the fact that the time limit to do so had expired. 189. We then turn to the deals in question where HMRC did deny the input tax to RHJ on its purchases from CCL. 190. The first invoice for the 07/13 period relates to a sale by CCL to RHJ of 12690 kg of 98% heavy copper on the29 July 2013 . 191. HMRC trace this to an invoice from GPSE to CCL dated10 June 2013 again for 98% heavy copper for exactly the same quantity, 12,690 kg. 192. The second deal is a sale from CCL to RHJ on the1 August 2013 for 23.498 tonnes of 98%. HMRC trace this to a GPSE the invoice to CCL labelled heavy scrap copper in a quantity of 23.4 tonnes on the18 June 2013 . 193. The third deal is an invoice from CCL to RHJ on5 August 2013 . There are two metals on this invoice, but HMRC trace the only one, 25,925 kgs of mixed copper granules which HMRC trace back to an invoice from GPSE to CCL on the13 June 2013 labelled 98% copper granules with a weight of 25,926 kg. 194. The fourth deal is an invoice from CCL to RHJ on15 August 2013 for 19,907kg copper granules. HMRC trace this to an invoice from GPSE to CCL for 19,907kg of 98% copper on the 24 of May 2013. 195. Deals 5 and 6 deals actually related to the same invoice from CCL to RHJ for two quantities of 98% heavy copper 3500kg and 4868 kg on an invoice dated 21st of August 2013 which HMRC traces to a GPSE invoice to CCL on the31 May 2013 for two quantities of 98% copper, again of weights 3500kg and 4868 kg. 196. These deals are summarised in the table below: Date sold Date bought Weight sold (kg) Weight bought (kg) Difference time (days) Difference weight (kg) 29/7/13 10/6/13 12690 12690 49 0 1/8/13 18/6/13 23,498 23,400 44 98 5/8/13 13/6/13 25,926 25,925 53 1 15/8/13 24/5/13 19,907 19,907 83 0 21/8/13 31/5/13 3,500 3,500 82 0 21/8/13 31/5/13 4,868 4,868 82 0 197. This table shows that we are faced with two opposing probabilities. It is likely that, where items of the same weight (or same within a tolerance of less than 1%) are bought and sold, that the item sold is the same as the item bought. Where the weights are round numbers that is possibly less likely, but here we mainly have weights not in round 100s. 198. However, it is unlikely that a scrap metal dealer would leave metal in his possession for periods as long as 11 weeks without selling it on. 199. It is particularly unlikely that a metal bought in May should be traced to a sale in August when sales of the same metal had been made in July and earlier in August. 200. We also note the contrast between the transactions in the earlier quarter, where it appears that transactions buying and selling metal were made within a few days of each other, and here where the transactions are alleged to have taken place weeks apart but still be connected. 201. We consider that the length of time outweighs the similarity in weights, and we conclude that connection has not been proved. Fraudulent evasion - BMC 202. It is HMRC’s case that BMC was a fraudulent defaulting trader. Under cross examination of the relevant witnesses it was unclear when HMRC decided that BMC was a fraudulent defaulting trader or who had made that decision, but that is not relevant to the decision this Tribunal has to make. The decision this Tribunal has to make is whether on the evidence presented to the Tribunal BMC was a fraudulent defaulter. 203. It is common ground that BMC complied with all their VAT obligations up to 05/13. 204. The return for the next period was due on 7/10/13. They were not therefore in default until 8/10/13, which is roughly halfway through the period that covers the transactions in question. HMRC therefore need to show that there was an intention to default. 205. BMC entered insolvency on30 June 2014 owing VAT of£2.6m . It is HMRC’s case that this was a fraudulent default, essentially pre-planned by the director of BMC. 206. HMRC rely on a number of facts to make their case. 207. Firstly, they rely on the fact that Chris Cooper and his son Craig Cooper (who HMRC allege was heavily involved in the running of BMC) had a pattern established over many years of running a business which goes into liquidation owing VAT. 208. HMRC point to the fact that (subsequent to the transactions in question here) Chris Cooper was disqualified from being a director and was imprisoned for 12 months as a result of his conduct as a director of Towmasters. 209. HMRC believe that in relation to the trade of Towmasters, BMC and WM Darleys, a clear pattern is shown, amounting to planning, that a new business will take over from the old business and the old business will fold, leaving a VAT debt. 210. HMRC state that during his dealings with them in relation to BMC, Chris Cooper did not act honestly, telling them he was planning to move into the haulage business when this did not prove to be the case. 211. The Appellant’s case is that the alternative reason for the failure of BMC to file a VAT return is that their records were not available, having been taken by the police. 212. The Appellant points out that at the time, with full information available to them on previous defaults by companies run by the Cooper family, HMRC did not make the decision that BMC were a fraudulent defaulter. 213. The Appellant submits that as Mr Cooper was under criminal investigation at the time, this makes it unlikely that he would make things worse for himself. 214. We decide that HMRC has made out the case that BMC was a fraudulent defaulter and that the intent to defraud was present throughout the relevant period. 215. We consider that the multiple occasions that Chris Cooper’s companies have defaulted on VAT make it likely that this was one of the same pattern. We consider there is clear evidence of dishonesty in his dealings with HMRC, in that his accountants sent a letter to HMRC on18 July 2013 saying BMC was going to move into haulage only. In a visit made by Emma Raglan (now Martin) on12 August 2013 Mr Cooper had long conversations with her about the scrap metal business and did not mentioned haulage at any point. 216. Even if records had been taken by the police, we consider that BMC did not make any effort to engage constructively with HMRC to file their return and pay the tax. We conclude that there was an intent to enter into a fraudulent default. 217. We do not consider Mr Cooper being under a criminal investigation makes it any more or less likely that he would, at that specific point in time, seek to default on VAT. knew or should have known - the law 218. HMRC need to prove that ‘the taxable person knew or should have known that, by his purchase, he was participating in a transaction connected with the fraudulent evasion of VAT’ (Kittel at [59]). 219. Having dealt above with ‘connected’ and ‘fraudulent evasion’ we now turn to ‘knew or should have known’. 220. It is convenient to set out the law that we are applying here before we turn to the facts of the case. 221. The case of Synectiv Limited [2018] FTT 92 (TC) contains a useful summary of the law and we quote the relevant parts below: The key applicable legal principles are derived from Axel Kittel v Belgium; Belgium v Recolta Recycling (C-439/04 and C-440/04) [2006] ECR 1-6161 and the Court of Appeal decision in Mobilx Ltd (in administration) v The Commissioners for HMRC[2010] EWCA Civ 517 ,[2010] STC1436 . There is no relevant distinction between domestic and Community law in this regard ( Mobilx at [49]). The right to deduct must be refused: “… 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’.” ( Kittel at [59]). The only issue in dispute here is whether Synectiv “should have known” that it was participating in a transaction connected with fraudulent evasion of VAT. The meaning of this phrase has been considered in a number of cases, including by the Court of Appeal in Mobilx and more recently in Davies & Dann Ltd v HMRC[2016] EWCA Civ 142 ,[2016] STC 1236 . In Mobilx , Moses LJ explained at [51] that the concept could be understood by reference to the earlier ECJ decision in Optigen Ltd v HMRC (C-354/03)[2006] STC 419 , which referred to the absence of “means of knowledge”, and that the ECJ must have intended the phrase “knew or should have known” to have the same meaning as “knowing or having any means of knowing”
“[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 30 negligence, but because the objective criteria for the scope of that right are not met…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.” 21. It is accepted, however, that this is a high hurdle. The burden of proof is on HMRC (to the balance of probabilities). It is not enough to demonstrate that the trader should have known that he was running a risk that the transaction might be connected with fraud, or even that it was more likely than not that it was so connected: it must be shown that he should have known that he was taking part in such a transaction. Only that approach is consistent with the principle of legal certainty, under which a trader should be in a position to know before he enters into a transaction, and by reference to objective criteria, whether he will be entitled to deduct the VAT (paragraphs [55] to [58] in Mobilx ). Moses LJ went on to explain the position as follows: “[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.” 22. Towards the end of the judgment Moses LJ also provides some guidance to tribunals. Paragraph [82] contains a warning not to focus unduly on the question of whether the trader has acted with due diligence, because that may deflect the tribunal from the essential question of whether the trader “should have known”
‘These rules are designed to tackle VAT fraud. A virulent type of VAT fraud is known as Missing Trader Intra-Community (MTIC) VAT fraud. MTIC fraud is a systematic criminal attack on the VAT system detected in many EU member States. In its simplest form, the fraud involves a fraudster obtaining a VAT registration number in the UK for the purposes of purchasing goods free from VAT in another EU member State, selling them at a VAT inclusive purchase price in the UK and then not paying the output tax due to HMRC. The goods are then through a number of U.K businesses and finally sold outside the UK free from VAT. The final UK business claims a VAT repayment from HMRC that, if paid, crystallises the loss at the start of the UK supply chain. This type of fraud relies heavily on the ability of fraudulent businesses to sell goods or services to other businesses that are complicit in the fraud, prepared to turn a blind eye, or not sufficiently circumspect their trading connections. Such action fuels the growth of the fraud. These rules remove the attraction of financial gain. 236. Section 6 of the notice is entitled ‘Dealing with other businesses - How to ensure the integrity of your supply chain. 237. Section 6.2 includes ‘The following are examples of specific checks carried out by businesses that took part in the exercise in 2003 when these rules were introduced. These may also help you to decide what checks you should carry out, but this list is not exhaustive and you should decide what checks you need to carry out before dealing with a supplier or customer: · obtain copies of Certificates of Incorporation and VAT registration certificates · verify VAT registration details with HMRC · obtain signed letters of introduction on headed paper · obtain some form of written and signed trade references . · obtain credit checks or other background checks –from an independent third party · insist on personal contact with a senior officer of the prospective supplier, making an initial visit to their premises whenever possible . · obtain the prospective supplier’s bank details, to check whether a) payments would be made to a third party; and (b) that in the case of an import, the supplier and their bank shared the same country of residence 238. It is common ground that large parts of the notice contain examples and details that are not relevant to the scrap metal industry. 239. We turn first to the points around due diligence. HMRC have not produced any evidence that due diligence performed on BMC and on CCL was materially different to that performed on other similar suppliers. It is (now) common ground that RHJ Ltd started requesting a formalised due diligence pack from its new suppliers after the point at which it had started trading with CCL, and before the point at which it started trading with BMC. 240. The due diligence performed on CCL was to obtain a copy of the CCL VAT certificate, details of the CCL bank details, and a self billing arrangement. 241. RHJ also state that they performed a check on the VAT registration with HMRC at the time they started trading with CCL, in 2008. Since ‘Wigan checks’ started on a central basis in 2009, HMRC have been unable to find a check done by RHJ Ltd on CCL, but we accept the truth of the statement from RHJ Ltd that one was performed. 242. HMRC state that RHJ should, in addition to this initial check, firstly update their checks on suppliers annually, and secondly also perform credit checks on suppliers. 243. A credit check on CCL would have shown a nil credit limit advised. HMRC say that this should have led RHJ Ltd to perform further due diligence. Examples of this due diligence they gave would be to ask CCL for the due diligence it performed on its own suppliers, and to be suspicious that CCL could run a business without credit. 244. The Appellant state that it would be extremely unusual commercial practice to enquire of its suppliers what due diligence they did on their own suppliers. The supplier would not release names of their suppliers as this may lead to loss of business. 245. The Appellant also state that they repeatedly asked HMRC what they should look for if they performed a credit check on a supplier. RHJ were not extending credit to their suppliers so even if a nil credit limit were advised they did not run a risk. In the scrap metal business it would not be necessary to be able to obtain credit, as if they sold goods on quickly, the payment from their customers can be used to pay their suppliers. RHJ state that HMRC were unable to help them in this regard. 246. In relation to the due diligence performed on BMC, the Appellant’s due diligence records consist of: (i) An undated standard form letter under the hand of Terry Hartley, asking for 7 specified documents “In order to comply with HM Revenue and Customs” . (ii) Faxed copy of amended BMC VAT certificate, amended on31 October 2012 and showing a fax date of17 December 2012 . (iii) Signed letter of introduction from BMC under the hand of Chris Cooper, showing a fax date of17 December 2012 . (iv) BMC certificate of incorporation, showing a fax date of17 December 2012 . (v) Unsigned letter from BMC under the hand of Chris Cooper, showing a fax date of17 December 2012 , containing information relating to the company’s control and ownership, address and bank details. (vi) Completed form setting out BMC’s name, address and bank details, showing a fax date of17 December 2012 . (vii) Completed form setting out BMC’s name, VAT number, phone and fax numbers, responsible person and bank details, showing a fax date of17 December 2012 . (viii) RHJ fax under the hand of Terry Hartley, address to HMRC and dated17 December 2012 , requesting a VAT verification check on BMC. (ix) HMRC fax cover sheet, dated18 December 2012 , attaching letter. (x) HMRC faxed letter, dated18 December 2012 , confirming BMC’s VAT number. (xi) A self-billing agreement, signed by Terry Hartley and dated September 2013 (apparently faxed to the Appellant on19 September 2013 ) 247. HMRC submit that in addition to this they would expect to see a credit check done on BMC. They also state that the appellant could have reviewed information available on Companies House in relation to former companies run by Chris and Craig Cooper. They state that had RHJ Ltd done so, they would have shown that HMRC was the primary creditor of each, with debts running into millions of pounds. 248. HMRC also state that RHJ should have performed due diligence that would have revealed that Craig Cooper was disqualified as a director and that this disqualification was related to VAT fraud. 249. HMRC also state that RHJ Ltd should have been suspicious of the Cooper family companies because HMRC had told RHJ Ltd not to enter into a self billing arrangement with Fellowbrook, a Cooper family company that BMC traded with in 2006-2008. 250. HMRC also state that RHJ should have been suspicious of BMC being able to trade with no credit limit. 251. HMRC point to the fact that the Cooper family have run a series of businesses that have failed and owe large amounts of VAT, and that RHJ Ltd should have been suspicious of the fact that companies were taking over business from a previous (Cooper family) company. 252. The HMRC opening submission states that the due diligence was perfunctory and ‘cannot have given the Appellant any serious comfort - it has all the appearance of window dressing or a box ticking exercise’. 253. The Appellant’s position is that they thought they were doing the due diligence that HMRC required, and that HMRC (Mr Payne) had himself told them that their due diligence was good. 254. The Appellant did not see what comfort it would gain from a credit check on a supplier to whom it was not extending credit, and despite asking HMRC what they should do with this information they were not told. 255. The Appellant questions whether at the time (various points between 2008 and 2013), information now publically and relatively easily available on the Companies House website would have been easy to find. In particular they challenge the point that they could have found out that previous Cooper family companies had folded owing large debts to HMRC. 256. The Appellant state that they did further due diligence on BMC such as checking that BMC were registered with Rotherham Borough Council under the Scrap Metal Dealers Act, and also visiting their premises. 257. The Appellant points out that BMC was run by someone that had been in the scrap metal trade for decades and they had no reason to think suspiciously of the transactions they were doing. Tax Loss letters 258. RHJ Ltd received a tax loss letter in relation to CCL dated9 August 2013 . RHJ Ltd received a second tax loss letter in relation to CCL dated7 November 2013 . RHJ Ltd traded with CCL until14 November 2013 . HMRC submit that the fact that RHJ Ltd did not immediately cease to trade with CCL Ltd shows that they did not take indicators of VAT fraud seriously, and that shows that they should have known that CCL was involved in VAT fraud. 259. The Appellant stated that in every other case apart from CCL, RHJ Ltd stopped dealing with any supplier about whom they received a tax loss letter. They point to the cases of Premier Waste and Recycling Ltd (letter received in 2012) and Cox Recycling Ltd (letter received2 August 2013 . 260. Ms Greaseley explained that they were not very clear what to do when they received a tax loss letter as HMRC always made it clear that the decision was up to them. She explained that when the first letter about CCL was received RHJ Ltd decided to ‘deal with it themselves’ as they had previously not found HMRC helpful. 261. This assertion is backed up by the fact that Ms Greaseley had in fact phoned HMRC on5 August 2013 about the letter received in relation to Cox Recycling Ltd a few days earlier. On receiving the letter about CCL Ltd (sometime after9 August 2013 ) this phone call would be fresh in her mind. RHJ Ltd therefore, rather than phoning HMRC again, phoned up CCL to ask for an explanation. 262. The explanation that RHJ Ltd received from CCL was that the letter was a mistake, that CCL had phoned up Wes Macdonald at HMRC, and that the matter would be sorted soon. That explanation was not true, but at that point RHJ Ltd did not know this. The explanation appeared plausible to them as they had (they believed) received a letter in error in regarding McGrails Scrap Metal & Recycling. The company had been deregistered and then re-registered a short time afterwards. 263. HMRC point out that firstly, the McGrails letter was not a mistake (because the company had been deregistered and re-registered) and secondly, that RHJ Ltd should not have accepted information from CCL Ltd as true. 264. On receipt of a second tax loss letter about CCL Ltd, RHJ Ltd immediately stopped trading with them. knew or should have known - discussion 266. The Tribunal is very mindful of the case law in this area. The case law makes it clear that the totality of the evidence should be reviewed, not merely taking everything point by point, but looking at it all together. In addition, the case law makes it clear that the ‘should have known’ test is a high hurdle. It is not sufficient it was more likely than not that the transaction was connected to fraud. It requires that fraud is the only reasonable explanation. This does not mean that the Appellant needs to know how the fraud was carried out. Nor does it mean that HMRC should, of their own volition, consider and rule out all other possibilities. But where there is another reasonable explanation for the transaction then this should be considered, by HMRC and by this Tribunal, before reaching a decision. 267. During the hearing HMRC attempted to show that it was possible that the Appellant knew that a fraud was being committed. The main points that HMRC raised to try and show this were to try to demonstrate that weaker due diligence had been performed on BMC and CCL than on other companies, and to try to elicit evidence that the senior management team at RHJ knew of the disqualification of Craig Cooper and knew that the Cooper companies had a history of failing and owing money to HMRC. 268. HMRC did not make these points out. They produced no evidence to back up either point, and under cross examination all the witnesses for the Appellant were firm on all relevant points. BMC and CCL were subject to the same due diligence as other suppliers. None of the senior management team had dealt with Craig Cooper in relation to BMC, nor knew of his disqualification, and none knew of any reason to be suspicious of the Cooper family companies. 269. We find that the Appellant did not know of any fraud at either BMC or (though we have not found a fraud did happen) at GPSE (which, in any case, was not known by the Appellant to be involved in its supply chain). 270. We then turn to the ‘should have known’ test. We have considered a number of relevant factors here, which we list below and then consider in totality. Nature of the transactions 271. It is not suggested that there is anything in the nature of the transactions themselves that should have alerted the Appellant to anything suspicious. The material bought by the Appellant from the relevant suppliers was material that it bought from any number of suppliers in the ordinary course of business. It was material that, in the case of CCL, it had been buying from that supplier for a number of years, and in the case of BMC, it had bought from Towmasters for a number of years. Knowledge of MTIC fraud in the scrap metal industry 272. It is very clear from all the evidence that HMRC has, for a number of years, engaged with scrap metal dealers on ‘the problem of MTIC fraud within the scrap metal industry’