In Field Opportunities Ltd v HMRC [2019] TC 7326, the First Tier Tribunal (FTT) held that a trader should have realised that transactions were probably connected with fraud. As a result they disallowed a VAT input tax of more than £240,000.

The trade involved the selling of leads for PPI claims. A supplier had issued false VAT invoices and he was sent to prison for nine years in 2018 for cheating the Revenue.

The FTT found that the company did not actually know of the fraud, but should have known.

In particular, it should have been alerted that something was wrong by:

  • A high level of “orchestration” by the supplier, Mr Butler, and his companies
  • Due diligence into Mr Butler
  • A lack of commercial reality in some steps
  • High profit margins for little or no work
  • Contracts with obvious errors that were really just “window dressing”.

HMRC was criticised for treating their investigation as a missing trade fraud when there was no missing trader; the fraud was false invoices. Such criticisms comprised much of the company’s defence, but was not sufficient to displace HMRC’s decision.

There were also conflicts of evidence and some statements made that proved to be incorrect.

Links to our guides

What constitutes a valid VAT invoice?
What is a valid VAT invoice? Can you claim back VAT if the invoice is in someone elses' name?

Reverse charge & missing trader fraud (MTIC)
What is missing trader fraud? How does the reverse charge work? What penalties apply?

External link:

Field Opportunities Ltd v HMRC [2019] TC 7326

 

 

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