SK Metals Limited & Anor v The Commissioners for HMRC
Decision date: 10 October 2025
Neutral citation: [2025] UKFTT 1211 (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 First-tier Tribunal allowed appeals by SK Metals Ltd and its sole director Spencer Feldman against HMRC decisions denying input VAT, imposing a s69C VATA penalty, and issuing a s69D officer liability notice. The Tribunal found HMRC had not proved SK Metals knew or ought to have known its purchases from B Trade Ltd were connected with fraudulent VAT evasion (the Kittel test), and therefore set aside the input tax denials and the related penalty and officer‑liability notice. The Tribunal preferred contemporaneous documentary and corroborated oral evidence and found SK Metals' explanations and due diligence, while imperfect, did not make fraud the only reasonable explanation.
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 a trader exhibits some risk indicators (e.g. rapid trading with a new supplier, imperfect due diligence, invoice irregularities), those factors alone do not meet the Kittel "should have known" standard unless the only reasonable explanation is participation in fraud; tribunals must assess the totality of circumstances from the appellant's perspective, giving weight to contemporaneous assurances and reasonable commercial explanations alongside any shortcomings in compliance.
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 (not determinative) that HMRC's unexplained delay in investigating B Trade Ltd between April and July 2021 may be material, suggesting the burden of proactive fraud detection should not be shifted entirely onto traders; and that invoice errors, profanity and informal documentation may indicate lax compliance but are not, without more, conclusive of participation in fraud.