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Has the Kittel boiled dry?
Key points
- HMRC can seek to recover missing VAT from a business that has not perpetrated fraud.
- Did the trader know or should they have known about a fraud in the supply chain?
- The onus is on HMRC to prove that a supplier was a fraudulently defaulting trader.
- Did the trader have the means of knowledge to uncover the history of the businesses in the supply chain?
- Would due diligence have revealed conclusive indicators of fraud?
- Legitimate traders must apply common sense and apply commercial due diligence.
Tax practitioners involved with HMRC disputes will be well aware of the department’s widespread and increasingly aggressive use of the ‘Kittel principle’ when tackling VAT frauds particularly against traders in a supply chain of transactions....
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