TC09659 - [2025] UKFTT 01211 (TC)

Fecha: 18-Sep-2025

Officer Pathak

Officer Pathak

18.

Officer Pathak is a Higher Officer of HMRC and is currently a member of the Fraud Investigation Service within Organised Crime. He conducts civil investigations predominantly focusing on supply chain fraud and has been in this role since January 2019. He gave evidence of HMRC’s dealings with SKM. Some of HMRC’s interactions with SKM had been by HMRC officers who did not give evidence (we were told they were not available to give evidence); this was not helpful and we indicate in our findings of fact where direct evidence would have been helpful and our approach to those points.

19.

Officer Pathak’s evidence as to the facts is set out below in our findings of facts. His view of the facts led to the issue of the Input Tax Denials, Penalty and PLN. Officer Pathak’s conclusion from his investigation was that he believed that SKM engaged in transactions connected with the fraudulent evasion of VAT, acting as a buffer trader in relation to the transactions with BTL and that SKM knew, or ought to have known that. His reasons can be summarised as follows:

(1)

the errors and profanities in the BTL invoices, when looked at in context of the wider picture and of a company doing multi millions of trading, were indicative of fraud in Officer Pathak’s professional experience;

(2)

on 18 March 2021 MTIC fraud and the need for due diligence was explained to SF, but he did not undertake more robust due diligence and continued to trade with BTL until BTL was deregistered;

(3)

trading commenced with BTL on 11 February 2021 but the due diligence email sent to BTL to complete the KYC template was not sent to BTL until 15 April 2021. During this time the total purchases from BTL amounted to £1,525,310. The input tax on these deals totalled £298,693;

(4)

the lack of due diligence, the dates at which it was requested, and previous due diligence education showed clear contrived trading. The high level of trade with a company SKM have never worked with previously showed a clear intention to defraud the revenue;

(5)

the due diligence completed by SK on BTL appeared designed to only demonstrate that the supplier existed, was located at the address declared and VAT registered. These checks were designed to protect SK’s input tax claims, but could not have provided them with any certainty that their purchases were not tainted by fraud. Officer Pathak accepted that some due diligence on BTL had been conducted by SKM, but maintained that some trading had been done before the due diligence and that the due diligence was anyway inadequate;

(6)

other factors suggested that SKM knew or should have known that they were participating in fraudulent transactions chains (e.g. high value transactions, goods not physically seen or inspected, the lack of any written contracts, dramatic and unexplained increase in trade over a short time that was not anticipated in the business plan of SKM);

(7)

it therefore followed that input tax should be denied and that the penalties issued under section 69C and section 69D VATA were appropriate; and

(8)

SF was the sole officer of the company at all material times and therefore its controlling mind and the person with sole responsibility for running SK on a day-to-day basis, and accordingly liable to the PLN.

20.

We found Officer Pathak to be a credible and reliable witness and accepted his evidence as to matters of fact as set out in our findings of fact. Where his evidence was opinion based on his experience of fraudulent behaviour rather than fact as such (e.g. his assertion that the errors in invoices sent to SKM indicated SKM knew or ought to have known there was a fraud in progress), we applied appropriate caution in assessing the weight to give to that evidence, although we accepted that Officer Pathak has experience of the patterns of trading of fraudsters.