Masstech Limited v Commissioners for Her Majesty's Revenue and Customs

Decision date: 18 August 2010

Neutral citation: [2010] UKFTT 386 (TC)

Overall AI summary confidence: high

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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 Masstech Ltd's claim to input VAT on a single 19 July 2006 sale of test strips that HMRC denied as connected to MTIC fraud. The Tribunal found on the balance of probabilities that MassTech (and its director Mr Ahtamad) did not have actual knowledge of MTIC trading and that HMRC failed to prove MassTech “ought to have known” the transaction was connected to fraud. The appeal was allowed and input tax restored; MassTech was awarded its reasonable 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: medium

Where a tribunal finds the appellant was genuinely unaware of MTIC/carousel fraud, the “ought to have known” inquiry must take that lack of awareness into account rather than assume a notional appellant already steeped in MTIC knowledge; HMRC bears the burden of proving, on the balance of probabilities, that the appellant had means of knowledge or that reasonable enquiries would have shown no other reasonable explanation for the transaction.

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 judgment notes that late disclosure of significant witness material and failures by parties to pursue responsive evidence can materially affect fairness and outcome in MTIC appeals, and that the mere presence of a contractual due-diligence clause (Clause 15) is not decisive where the party plainly did not act on it and its provenance is unclear.

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