Alex Harries t/a Glam Tanning and Beauty v The Commissioners for HMRC
Decision date: 15 October 2024
Neutral citation: [2024] UKFTT 909 (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 Ms Alex Harries t/a Glam Tanning and Beauty's claims for input VAT supported by invoices from Aware (directed by Marc Simpson) and penalties imposed by HMRC under s69 VATA and Schedule 24 FA 2007. The Tribunal found the transactions with Aware were connected to fraudulent VAT losses, that Ms Harries knew or ought to have known of that connection, and that HMRC reasonably refused to accept the replacement documentation under Regulation 29. The appeals were dismissed and the penalties (£66,450.01 under s69 and £15,755 under Schedule 24) were confirmed.
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’s ratio is that a taxpayer who has prior experience of denied input-tax claims due to fraudulent invoices and who has close links to the supplier may be treated as knowing, or as someone who ought to have known, that their transactions were connected to fraudulent VAT evasion (Kittel issue); and that HMRC may reasonably refuse to exercise its Regulation 29 discretion where replacement documents are inconsistent and the supplier’s VAT returns and conduct do not support the claimed 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 noted (obiter) that close operational or address links between taxpayer and supplier (shared addresses, prior joint companies) are material indicators in assessing whether the taxpayer should have known of fraud, and that payments to a supplier made before the supplier’s VAT registration can warrant heightened scrutiny of input tax claims.