TC09617 - [2025] UKFTT 01018 (TC)

Fecha: 13-Jun-2025

Stage 1: persuasive direct evidence of knowledge on the part of Mr Smith?

Stage 1: persuasive direct evidence of knowledge on the part of Mr Smith?

116.

The documentary evidence included evidence, from December 2021 and January 2022, in which Mr Smith stated to others that Estanza, or Estanza’s supplier, was involved in fraudulent VAT evasion (see [52(3) and (5)] above). These statements were, for the most part, made in the period of a month or so between Mr Smith asking Estanza for documentary evidence of its VAT compliance (shortly before Christmas 2021) and, on 17 January 2022, Deos receiving documentation from Estanza and (later that day) receiving an “explanatory” email from Mr Javan.

117.

We interpret this evidence largely as it appears on its face (with some reliance of Mr Smith’s oral evidence in this regard, which we found persuasive), as follows:

(1)

acting on advice from Deos’ accountant, Mr Smith asked Estanza for further documentary evidence of its VAT compliance (this was Mr Smith’s request just prior to Christmas 2021);

(2)

Mr Smith was anxious to receive this as soon as possible; he was clearly concerned about the risk of Estanza’s being involved in VAT evasion; he grew impatient when the information was not forthcoming by early/mid January 2022;

(3)

Mr Smith used accusations of involvement with VAT fraud (and the threat of withdrawing business from Estanza) as a way to put pressure on Estanza to respond, more quickly;

(4)

when Estanza did provided the documentation requested, on the morning of 17 January 2022, Mr Smith examined it carefully and discovered a problem, in that a supplier to Estanza, WBM Global, had been deregistered for VAT. Mr Smith immediately raised this with Estanza. That afternoon, Estanza responded in a way that addressed Mr Smith’s concerns, in that

(a)

Estanza stated that WBM Global was not an ongoing supplier to Estanza, but rather had last supplied Estanza three or four months earlier (in September 2021); Estanza said it had cut ties with WBM Global, due to a commercial dispute;

(b)

Estanza recounted the checks that Estanza did on active customers and suppliers, impliedly explaining why Estanza had not been aware of WBM Global’s deregistration for VAT in late December 2021 (by which time, Estanza was saying, WBM Global was no longer an active supplier to Estanza);

(5)

Mr Smith was further reassured by his knowing, as a result of regular checking (two to four times a month between January and May 2022) that Estanza was not itself deregistered for VAT.

118.

In a nutshell, we are persuaded that, by the time of the purchases (and, in fact, by the time Mr Smith had Deos “restart” buying from Estanza from 28 February 2022), Mr Smith genuinely repented of his views, expressed in some rather intemperate communications with Estanza and with his RCS contact in December 2021 and January 2022, that Estanza was connected with fraudulent VAT evasion.

119.

We note that in his WhatsApp messages with his RCS contact, there are references in March and April 2022 by Mr Smith to his “last supplier” being “bent” and “a crook” (see [52(7) and (8)] above); we are satisfied that these do not denote a belief on Mr Smith’s part that Estanza was connected with fraudulent VAT evasion, either because he was referring to Thames (which, Mr Smith found out in December 2021, was being investigated by HMRC: see [52(6)] above) and/or because this was commercial bluster with a view to getting RCS to pay a better price.

120.

In summary, the direct evidence of knowledge on the part of Mr Smith (and so of Deos) of the purchases’ connection to fraudulent VAT evasion is, in our view, unpersuasive.