TC09659 - [2025] UKFTT 01211 (TC)

Miss Brown urged us to find that the lack of evidence of commercial discussions or negotiations between SKM and BTL and the absence of evidence that SKM had attempted to find other suppliers of scrap (e.g. SF’s waste contacts), suggested that the transactions with BTL were contrived and not legitimate commercial transactions.

On this point, we found the oral evidence of SF and KG to be persuasive. In summary the facts we found were that price lists were issued daily to potential suppliers and, if suppliers wanted to take up the available prices, then they contacted one of the SKM team by email/phone/WhatsApp to enter into a contract. In the case of BTL that contact was usually with TP. It would have been helpful to have evidence from TP and to have access to the emails and WhatsApp messages which SF told us in his oral evidence were in existence. But we were persuaded that as a fact the trading had been carried out in this way. This seemed to us to indicate that there had been commercial negotiations.

KG's evidence as to the first trade with BTL also seemed to us a point in favour of there having been commercial negotiations. KG’s evidence (which we accepted as fact) was that in the first trade, BTL had been concerned that SKM might not pay for the load of metal that was to be delivered and this concern could only be overcome by way of an arrangement with BTL under which their delivery driver remained onsite at SKM whilst SKM inspected the first load of goods and made payment. To a prudent business, a concern on the part of BTL that SKM might be trying to defraud them might indicate if anything that BTL was a legitimate trader.

We accepted SF’s evidence that he did not approach his waste contacts as potential suppliers because they were too large and their needs too complex for SKM to deal with at the start of its trading development.

We also took into account that SKM did have other significant suppliers of scrap (which made up nearly half of its turnover in the relevant period) which had been identified by way of cold calling.

Therefore we did not consider at this point assisted HMRC's case.