Harlequin Brickwork Limited & Ors v The Commissioners for HMRC
Decision date: 10 July 2026
Neutral citation: [2026] UKFTT 1038 (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 whether input VAT denied by HMRC under s.69C/VATA was lost as a result of fraud (Kittel condition A) and whether the appellants were connected to that fraud (condition B). HMRC’s very late application to amend its Statement of Case to expand fraud allegations was largely refused. On the pleaded and proven evidence HMRC did not prove that the VAT loss was occasioned by fraud, so the appeals on the substantive VAT denial succeed and the related s.69C penalties fall away.
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 refused HMRC’s late substantive amendments where they would materially expand the pleaded case and prejudice fair preparation, and treated allegations of fraud as requiring adequate particularisation in the pleadings (headings and document structure determine whether facts are pleaded as indicia or as fraud). Applying the pleaded evidence, HMRC bore the burden to prove on the balance of probabilities that the VAT loss was occasioned by fraud, which it failed to do; therefore the VAT assessments and related penalties could not stand.
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 commented (hypothetically) on penalty mitigation under s.70 — that factors such as the scale of the loss, who prompted the investigation, and taxpayer cooperation would be relevant and that, in this case, a reduction from 30% to 20% would have been appropriate had penalties otherwise applied. It also observed that officer liability under s.69D requires actual attribution of the company’s conduct to the officer; mere directorship is not automatically sufficient.