United Kingdom Tax Tribunal Clarifies Right to Deduct Input VAT

The United Kingdom First-Tier Tax Tribunal Oct. 10 issued a judgment in Case No. TC09659, clarifying the right to input VAT deductions. The taxpayer, a waste metal broker, sought to deduct input VAT on transactions with a business linked to VAT fraud. HM Revenue and Customs denied the claim and issued a decision holding the taxpayer’s director personally liable for a VAT fraud penalty. On appeal, the Tax Tribunal found that: 1) the taxpayer arguably could have known it was engaged in transactions with a risk of VAT fraud, given the risk in the sector, and the other business’s invoices ...