Easy Work Limited & Ors v The Commissioners for HMRC

29 October 2024

[2024] UKFTT 969 (TC)

First-tier Tribunal

An accountant created a fake business network to trick the government out of VAT. The tax authorities caught him, and a judge mostly agreed that the accountant and his businesses had cheated. The judge said the businesses couldn't keep the wrongly claimed VAT and had to pay penalties. One penalty was slightly reduced because of a mistake by the tax authorities.

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.

Easy Work Limited & Ors v The Commissioners for HMRC

Key Facts

Legal Principles

Outcomes

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