Big and Small Construction Limited v The Commissioners for HMRC
Decision date: 3 June 2026
Neutral citation: [2026] UKFTT 816 (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
Big and Small Construction Limited (BSCL) appealed HMRC’s denial of input tax of £624,162 and a section 69C penalty of £187,248.60 alleging some purchases were connected to VAT fraud. The tribunal held BSCL should have known that supplies from Services A‑Z Ltd in periods 12/19 and 03/20 were connected to fraud so input tax for those items was denied, but allowed input tax for other suppliers and allowed the penalty appeal in full, reducing the penalty to nil.
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
The tribunal applied the agreed Kittel framework and found that a taxpayer “should have known” of a connection to fraud only where there are specific indicia which a reasonable trader in the taxpayer’s position would have investigated; general HMRC sector guidance does not, without particular indicators, impose a duty to undertake the full range of due diligence. Here, the presence of A‑Z invoices bearing two different UTR/VAT numbers constituted sufficient specific indicia to satisfy the “should have known” threshold for those supplies.
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 suggested (obiter) that a high overall proportion of transactions later traced to a tax loss (76.1% in this case) is not by itself a basis for concluding a trader who did not know of fraud should have deduced a connection, and that HMRC cannot generally shift its investigative role onto taxpayers by expecting them to establish their suppliers’ tax compliance absent particular indicia.