PPX Metal Management Ltd v The Commissioners for HMRC
Decision date: 3 May 2023
Neutral citation: [2023] UKFTT 405 (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 HMRC’s refusal to allow PPX input tax claims of about £3.57m for 659 purchases from 11 suppliers traced to fraudulent VAT defaults. The Tribunal found that each supply chain began with fraudulent VAT evasion, that PPX’s purchases were connected to that fraud, and on the balance of probabilities Mr Pearce (PPX) knew — alternatively should have known — of that connection. The appeal was dismissed and HMRC’s denial upheld.
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
The Tribunal applied established principles (including Kittel‑style reasoning) and held that where a purchaser repeatedly receives contemporaneous warnings (Tax Loss Letters, monitoring visits) and maintains minimal or inconsistent due diligence (notably failing to carry out or act on obvious checks), those circumstances can establish that the purchaser knew or ought to have known its purchases were connected with fraudulent VAT evasion; reliance on limited checks or HMRC contact does not negate knowledge where other objective red flags and conduct point to knowledge or wilful blindness.
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 observed that some evidential deficiencies (third‑hand officer evidence, delay) reduce provenance of certain documents but do not preclude reliance on contemporaneous visit reports and documents; and that commercial explanations for informal practices in the scrap trade do not excuse ignoring clear red flags such as third‑party payments and unusually large supplier credit.