Key Facts
- •HMRC alleged a fraudulent VAT scheme orchestrated by Anthony Lloyd Beckford (Mr. Beckford), involving multiple interconnected traders.
- •The scheme generated artificial VAT repayments through fictitious supplies of goods and services.
- •HMRC denied input VAT, deregistered several traders, and imposed penalties under section 69C VATA 94.
- •Three appeals remained before the Tribunal: Easy Work Limited, Pricerite Mini Mart, and APAS (Mr. Beckford).
- •The Tribunal found Mr. Beckford's evidence unreliable and deemed his explanations implausible.
- •The Tribunal found a network of businesses where VAT returns and summaries were fabricated, with discrepancies between input and output tax.
Legal Principles
Right to deduct input VAT; denial if used fraudulently or abusively.
I/S Fini H v Skatteministeriet (C-32/03)
Traders who knew or should have known of connection to fraudulent VAT evasion lose right to reclaim input tax.
Axel Kittel v Belgium & Belgium v Recolta Recycling SPRL (C-439/04 and C-440/04)
If a taxpayer should have known that their transaction was connected with fraudulent evasion of VAT, they lose the right to deduct.
Mobilx Limited (in Liquidation) v HMRC [2010] EWCA Civ 517
VAT registration can be refused or cancelled if there's evidence the VAT identification number will be used fraudulently.
Valsts ienemumu dienests v Ablessio SIA (C-527/11)
Penalties under section 69C VATA 1994 for transactions connected with VAT fraud.
Section 69C VATA 1994
Outcomes
Appeals dismissed except for a partial allowance regarding the penalty on APAS.
The Tribunal found sufficient evidence of a fraudulent scheme and the Appellants' involvement, justifying the denial of input VAT and deregistration.
Penalty on APAS (Mr. Beckford) reduced from £6,831 to £6,722.
HMRC had made errors in the penalty calculation; the Tribunal upheld the penalty as the requirements of section 69C VATA were met despite the fact that APAS may have had a minimal involvement in genuine supplies.