Active Infotech Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 18 May 2011
Neutral citation: [2011] UKFTT 328 (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 Active Infotech's claim for repayment of VAT of £6,033,565.13 which HMRC refused as connected to MTIC fraud. The Tribunal found most transactions (including two disputed contra‑trades) were linked to fraudulent VAT loss and that Infotech, through its director Mr Singh, knew or ought to have known the only reasonable explanation was connection to fraud. The appeal was dismissed and HMRC was authorised to seek costs for the hearing.
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 Kittel/Moblix principles: a trader loses the right to deduct/repayment where the trader knew or ought to have known that the only reasonable explanation for the transaction circumstances was connection with fraudulent VAT evasion; circumstantial features (uniform margins, rapid turnover, circular payment flows, goods released before payment, inadequate due diligence and documentary inconsistencies) can establish that knowledge on the balance of probabilities.
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 indicates that detailed post‑hoc banking analysis (e.g. FCIB EB numbering/timing) can be persuasive evidence of contrivance and circularity in MTIC schemes, that a taxpayer’s failure to attend for cross‑examination may weaken their case and justify caution in accepting statements, and that earlier HMRC repayments do not prevent later refusal where further evidence of fraud emerges.
Warning
Some passages are repetitive and the chunk is lengthy and dense, requiring careful reading to judgment the key findings. Notes are lengthy and somewhat repetitive; they appear complete on the Tribunal’s findings but require careful reading.