Kuldip Bachra v The Commissioners for HMRC
Decision date: 30 January 2023
Neutral citation: [2023] UKFTT 91 (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 concerns a PLN issued to Mrs Bachra arising from VAT input tax denied to her company OWD for purchases found to be connected to MTIC fraud. The Tribunal held the remaining transactions were connected to fraudulent VAT losses and that OWD should have known of that connection, but found OWD did not actually know and therefore the inaccuracies were not deliberate; because paragraph 19 requires a deliberate inaccuracy attributable to an officer, the PLN against Mrs Bachra was not sustained and her appeal was allowed. HMRC had validly withdrawn 43 deals and the Tribunal applied HMRC’s disclosed reduction when considering the quantum.
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 decision indicates that (1) objective and circumstantial evidence can establish that supplies were connected to fraudulent VAT evasion and that a trader "should have known" of that connection for loss‑of‑entitlement purposes, and (2) a finding that a trader "should have known" such a connection (establishing loss of input‑tax entitlement) does not by itself satisfy the separate subjective requirement that inaccuracies were made deliberately under Schedule 24/paragraph 19; the burden of proof that a trader knew or should have known lies on HMRC.
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 expressed views that third‑party due diligence reports may be treated as superficial where they merely confirm existence without meaningful financial or FITTED checks, and that trading before substantive due diligence weakens a trader’s defence. The Tribunal also voiced preliminary skepticism about HMRC increasing a period’s penalty in appeal without re‑issuing it.