Key Facts
- •Impact Contracting Solutions Limited (ICSL) was deregistered for VAT by HMRC in 2019, based on the Ablessio principle.
- •ICSL facilitated VAT fraud by 3,000 mini-umbrella companies (MUCs) but also made legitimate supplies exceeding the VAT registration threshold.
- •ICSL appealed the deregistration, leading to preliminary issues regarding the scope of the Ablessio principle.
Legal Principles
Ablessio principle: Tax authorities can deregister a VAT-registered person who facilitates VAT fraud, even if they also make legitimate supplies.
Valsts ienemumu dienests v Ablessio SIA (C-527/11)
Halifax principle: Community law cannot be relied on for abusive or fraudulent ends. Tax authorities can refuse VAT benefits if transactions constitute an abusive practice.
Halifax plc and others v Commissioners of Customs & Excise C-255/02
Kittel principle: A taxable person who knew or should have known they were participating in VAT fraud forfeits VAT benefits, regardless of profit.
Axel Kittel v Belgium; Belgium v Recolta Recycling (C-439/04 and C/440-04)
Marleasing principle: Domestic courts must interpret national law in light of EU directives.
Marleasing SA v La Comercial Internacional de Alimentacion SA Case C-106/89
Contra legem principle: Interpretation of national law cannot contradict its explicit wording.
Dansk Industri (DI) v Estate of Karsten Eigil Rasmussen (Case C441/14)
Proportionality: Measures must be suitable, necessary, and not disproportionate to the benefits.
R (Lumsdon and others) v Legal Services Board [2015] UKSC 41
Fiscal neutrality: Equal VAT treatment for similar competing supplies.
EU law
Legal certainty: Rules must be clear, precise, and predictable.
EU law
VATA 1994, Schedule 1, paragraph 1: Defines liability for VAT registration.
Value Added Tax Act 1994
VATA 1994, Schedule 1, paragraph 13: Deals with cancellation of VAT registration.
Value Added Tax Act 1994
EU law on VAT abuse continues to apply post-Brexit.
Taxation (Cross-border Trade) Act 2018, section 42; Finance Act 2021, section 98
Outcomes
Appeal dismissed.
HMRC's application of the Ablessio principle to deregister ICSL was not contra legem, disproportionate, or a breach of EU principles.