Brendan MacMahon t/a Irish Cottage Trading Company v Her Majesty's Revenue & Customs

Decision date: 11 November 2009

Neutral citation: [2009] UKFTT 304 (TC)

Overall AI summary confidence: high

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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 whether Brendan MacMahon t/a Irish Cottage Trading Company had satisfied the requirements to zero-rate 47 intra-Community supplies to Enkay Marketing SL. The Tribunal found that for most transactions the commercial transport documents were forged, the goods did not reach Spain, and the appellant had not taken reasonable precautions; it upheld the assessments except for four supplies in 06/05 and 12/05 where the appellant had taken reasonable steps. The appeal was allowed in part and no costs were awarded.

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 supplier seeking to zero-rate intra-Community supplies must prove on the balance of probabilities that the goods were removed to the member state of destination and hold valid commercial transport documentation in accordance with regulation 134 and HMRC Notice 725; where documentary evidence is shown to be false, the supplier can avoid liability only if he acted in good faith and took every reasonable precaution in the circumstances to avoid participation in tax evasion (applying the Teleos test to the trader’s actions and due diligence).

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 the Teleos “every reasonable measure” requirement is not a strict tick-box exercise but must be assessed in light of the trader’s circumstances and the nature of the transactions; and that HMRC’s prior acceptance of paperwork does not conclusively protect a supplier if later enquiries reveal fraud and the supplier failed to take reasonable precautions.

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