Blada Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 24 March 2010
Neutral citation: [2010] UKFTT 131 (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
Blada Ltd claimed input VAT repayments on 19 purchase transactions in March–May 2006; HMRC argued those purchases were connected to MTIC/carousel fraud and denied the input tax. The Tribunal found HMRC had proved a tax loss arising from fraudulent evasion in each chain, that Blada's purchases were connected to that fraud (directly for most deals and via contra‑traders for three), and that Blada should have known the purchases were so connected. The appeal was dismissed and HMRC awarded costs.
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
Where objective factors show a taxable person knew or should have known that by purchasing goods they were participating in transactions connected with VAT fraud, entitlement to input tax deduction may be refused; the standard of precautions required of a trader is judged against the objectively assessed risk of connection with fraud and can include ceasing to trade in that market or changing trading methods.
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 (in non‑binding remarks) that a contra‑trader’s subjective intention is generally irrelevant to the question whether it should have known its transactions were covering up fraud, that in high‑risk periods the standard of reasonable precautions is raised and reliance on paper due diligence or HMRC checks may be insufficient, and that the Tribunal was reluctant to make a reference to the ECJ on contra‑trading, leaving some issues open for higher courts.