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THE PARTIES’ CASES
THE PARTIES’ CASES
HMRC’s case on Deos’ state of knowledge
HMRC’s primary case was that Deos knew that the purchases were connected with the fraudulent evasion of VAT: considering all the circumstances surrounding the transactions themselves, Deos’ introduction to and history with this type of transaction, and its knowledge of the risk of fraud in such a market, it must have known of the connection. Alternatively, Deos should have known of the connection with fraud.
HMRC relied on the following factors.
- Heading
- These were appeals against HMRC’s
- The issues for the Tribunal
- Evidence
- FINDINGS OF FACT
- The supply chain in relation to the purchases
- Deos and its business
- Spring 2021: Deos starts buying and selling, wholesale, electronic consumer goods like Apple AirPods
- August 2021: Deos starts buying from Estanza
- Deos’ pattern of trading with Estanza
- Examples showing commercial risks taken by Deos in its trading pattern with Estanza
- The break in Deos’ trading with Estanza in December 2021-February 2022
- Things said about VAT fraud in Mr Smith’s WhatsApp messaging with his contact at RCS Holland BV
- Deos and RC
- Deos’ interactions with HMRC concerning VAT fraud
- Estanza’s VAT deregistration and reregistration
- SUMMARY OF RELEVANT LAW
- Mobilx
- Other authorities on Kittel principles
- HMRC’s pleadings
- THE PARTIES’ CASES
- Deos’ general awareness of MTIC fraud
- The suspiciousness of the market in which Deos was dealing
- Inadequacy of Deos’ due diligence and of its “break” in trading with Estanza in December 2021-February 2022
- The unlikelihood of coincidence that so many of Deos’ transactions should have traced to fraudulent tax losses
- Other points
- HMRC’s concluding submissions
- Deos’ case on its state of knowledge
- Deos’ procedural arguments (and HMRC’s response)
- were not mentioned in HMRC’s statement of case, and so should not be considered by the Tribunal, in keeping with the principle in E Buyer of HMRC having to give properly informative particulars of the
- DISCUSSION AND CONCLUSIONS
- Stage 1: persuasive direct evidence of knowledge on the part of Mr Smith?
- Stage 2: were the circumstances of the purchases sufficiently suspicious so as to draw an inference of knowledge (of connection with VAT fraud) on the part of Mr Smith/Deos?
- Stage 3: were the circumstances of the purchases sufficiently suspicious that a reasonable businessperson would have known that they were connected with fraudulent VAT evasion; put differently, was th
- Conclusions