Han Ali Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 27 July 2010
Neutral citation: [2010] UKFTT 351 (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
This appeal concerned Han Ali Ltd's claim to recover input VAT of about £62,535 for the quarter to 31 March 2007, which HMRC refused on the ground the purchase formed part of a VAT fraud. The tribunal found a chain of linked transactions involving missing traders (Texvale and Bee‑Zee), concluded Texvale deliberately evaded VAT, and that the company's director, Mr Patel, was a knowing participant in a pre‑arranged scheme. The appeal was dismissed and costs were ordered against the appellant.
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: medium
Where objective factors demonstrate that a taxable person knew or ought to have known they were participating in transactions connected to VAT fraud, their entitlement to deduct input VAT may be refused (application of the Kittel standard). The tribunal also accepted that a national authority need not prove goods originated from another Member State to establish that a supplier charged VAT and failed to account for it in a way that caused loss.
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 contains observations that the term MTIC is used loosely by the Revenue and that a fraud need not be labelled strictly as MTIC for a repayment claim to be disallowed. It also comments that "knew or should have known" encompasses having the means to know, and failure to employ available means of inquiry can deprive a trader of the right to deduct.