United Kingdom Tax Tribunal Clarifies Eligibility for Input VAT Deductions Related to Fraud

The United Kingdom First-Tier Tax Tribunal Jan. 26 issued a judgment in Case No. TC09765, clarifying eligibility for input VAT deductions. The taxpayers, a construction recruitment company and its director, appealed HM Revenue and Customs (HMRC) decisions denying input VAT deductions for payments to four payroll service providers. The HMRC denied the deductions on the grounds that the taxpayers knew or should have known that the transactions were fraudulent and related to VAT evasion. On appeal, the Tax Tribunal found that: 1) the evidence was sufficient to show that the taxpayers knew that the transactions were connected to VAT fraud; ...