Roma II Ltd v Commissioners for Her Majesty's Revenue and Customs
Decision date: 27 May 2010
Neutral citation: [2010] UKFTT 243 (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
Roma II claimed input VAT of £167,737.50 for October 2006 arising from a large cross‑border sale chain; HMRC refused, alleging the transaction was connected to VAT fraud. The tribunal found that Keycomp had fraudulently failed to account for output VAT and that Roma II’s director, Mr Nayar, given prior MTIC warnings, limited due diligence, release of goods before payment/inspection and other indicia, ought to have known the transaction was connected with fraudulent VAT evasion. The appeal was dismissed and Roma II was ordered to pay HMRC’s costs.
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
A trader who enters into a high‑value, informal cross‑border supply shortly after receiving warnings about MTIC fraud, and who carries out only minimal checks (including release of goods before payment and before inspection reports) can be found to have known or ought to have known that the transaction was connected with fraudulent VAT evasion; such knowledge disentitles the trader to reclaim input tax.
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 tribunal indicated that arranging ostensibly “100%” inspections after agreeing a deal, but not relying on them, may be regarded as a merely cosmetic precaution; and that personal or community trust between buyer and seller does not excuse lack of due diligence when dealing with unknown suppliers or intermediaries.