4Site Services London Limited & Ors v The Commissioners for HMRC
[2024] UKFTT 143 (TC)
Foundry Supplies UK Limited v The Commissioners for HMRC
25 July 2023
[2023] UKFTT 656 (TC)
First-tier Tribunal
A company appealed a tax decision. The judge said one appeal was invalid because HMRC's initial letter wasn't an official decision. HMRC had to pay the company's legal costs for being confusing. The company also wanted more details about the tax fraud, but the judge said HMRC provided enough evidence already.
Key Facts
- •Foundry Supplies UK Ltd appealed HMRC's refusal to allow input tax deductions, claiming the denials were connected to fraudulent VAT evasion.
- •HMRC applied to strike out appeal reference TC/2022/13652, arguing it lacked jurisdiction because the initial letter wasn't an appealable decision under s83(1) VATA.
- •Foundry sought further particulars of HMRC's allegation of an 'overall scheme' to defraud, specifically requesting the type of fraud.
- •HMRC argued that proving tax loss and patterns of behaviour demonstrating fraudulent activity sufficed, regardless of the specific fraud type.
Legal Principles
Tribunal's jurisdiction to strike out appeals under rule 8(1) FTT Rules (lack of jurisdiction) and rule 8(3)(c) FTT Rules (no reasonable prospect of success or abuse of process).
FTT Rules
Appealable decisions under s83(1) VATA concerning input tax.
Value Added Tax Act 1994
Kittel principle: HMRC can deny input tax if the taxpayer knew or should have known of fraudulent VAT evasion in the transaction chain.
Axel Kittel v Belgian State C-439/04 and C-440/04
Cost orders under rule 10(2)(b) FTT Rules.
FTT Rules
Requirements for further and better particulars in fraud cases, needing clear allegations.
Three Rivers District Council v Bank of England [2001] UKHL 16
Outcomes
Appeal reference TC/2022/13652 struck out due to lack of jurisdiction.
The September 14, 2022 letter did not constitute an appealable decision under s83(1) VATA.
HMRC ordered to pay Foundry's costs from October 7, 2022 to May 31, 2023 due to confusing correspondence.
HMRC's conduct was deemed unreasonable, leading to unnecessary costs for Foundry.
Foundry's application for further and better particulars refused.
HMRC's evidence of tax loss and patterns of behaviour indicating fraudulent activity was deemed sufficient, regardless of the precise fraud type.
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