TC09617 - [2025] UKFTT 01018 (TC)

HMRC submitted that Deos had a general awareness of the prevalence and nature of MTIC fraud before it undertook the purchases.

HMRC submitted that a reasonable businessperson, having been told by Thames in the spring of 2021 that customers wanted serial numbers of goods due to the risk of carousel fraud, would have sought advice about VAT fraud and would have investigated the entire supply chain for the goods being purchased (not just the company that was the immediate supplier).

Clearly, by the time of Mr Smith’s email to Estanza just before Christmas 2021, Deos was aware that VAT was “rife” in the electronic goods trade. HMRC noted the references to VAT fraud in Mr Smith’s conversations with his RCS contact. HMRC submitted that those messages demonstrate the presence of fraudulent participants in Deos’ own supply chains, in that they indicate that some fake goods had been supplied by (and therefore to) Deos. HMRC submitted that a reasonable trader in Deos’ position would have been looking out for the fraudulent participants in their supply chains.