Greener Solutions Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 26 August 2010
Neutral citation: [2010] UKFTT 412 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Greener Solutions appealed HMRC's refusal to repay £176,346.10 input VAT on a chain of trade in Nokia phones; HMRC conceded the wider chain involved MTIC fraud and that Greener's transaction was connected to it. The tribunal considered whether MBG/Mr Murray's knowledge should be attributed to Greener and whether Greener "ought to have known" of the fraud. Applying the Hampshire Land exception, the tribunal held MBG/Mr Murray's guilty knowledge was not attributable because his conduct was directed against and prejudicial to Greener. On the facts and applying the Kittel "ought to have known" test, HMRC failed to prove Greener should have known the transaction was connected with fraud, so the appeal was allowed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal applied the Hampshire Land exception to attribution: where an agent's wrongdoing is directed at and harmful to the principal, it is unjust to impute the agent's guilty knowledge to the company. Separately, applying the Kittel standard, deprivation of input tax requires proof that the taxpayer knew or should have known that the only reasonable explanation for the circumstances was connection with VAT fraud; on these facts HMRC did not meet that threshold.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment noted that evidence about market-wide inherent probability of fraud and practical commercial explanations for atypical features (such as delayed paperwork, use of warehouses, and payment timings) are relevant to the "ought to have known" assessment and can reduce the probative weight of isolated suspicious indicators.