TC09617 - [2025] UKFTT 01018 (TC)

Deos had available to it, at the time of the purchases, information that would have caused a reasonable trader in its position to conclude that the only reasonable explanation for the purchases was that they were connected with VAT fraud.

Deos had undertaken transactions in a new market with which it was unfamiliar, relying on what it was told by its first supplier, Thames, as to how the market existed and operated, and trusting what it was told by Thames and Estanza, its (only) suppliers, with little independent information or assessment as to the accuracy of it. At the time of the purchases, Deos knew (from Mr Collins telling Mr Smith) that HMRC had raised concerns with Mr Collins as to the Thames deals; and Mr Smith himself had had real concerns, in January 2022, as to the connection of the Estanza deals to fraud. In other words, by the time of the purchases, serious doubt existed about both of the suppliers that Deos had felt able to trust.

Had Mr Smith given thought to how the ‘grey market’ in which Deos was participating could be legitimate when Deos was able, with minimal experience, to undertake regular high value deals, and had he considered properly all of the information available to Deos as a reasonable trader in Deos’ position would, he would have concluded that the purchases were connected with fraudulent VAT evasion.