Mobile Export 365 Ltd and Shelford (IT) Ltd v Commissioners for Her Majesty's Revenue and Customs
Decision date: 6 August 2010
Neutral citation: [2010] UKFTT 367 (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 repayment of input VAT claimed by two Axxia group subsidiaries for March–April 2006, which HMRC refused on the basis the goods had been used in MTIC-style fraud. The First-tier Tribunal found on the balance of probabilities that there was a tax loss in each challenged supply chain, that the losses were connected to fraud, and that the appellants knew or ought to have known of that fraud, so their input tax claims were denied. The tribunal treated the Axxia companies as a single business for attributing knowledge and relied in part on IMEI/NEMESIS evidence, patterns of low mark-ups, limited due diligence and witness evidence to reach its conclusions. All appeals were dismissed.
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 applied the civil standard that HMRC must prove a tax loss, its connection to fraud, and that the claimant knew or ought to have known; it held that (i) demonstrable duplication/circularity in IMEI/NEMESIS data can be material evidence putting a trader on notice of carousel-type fraud, and (ii) the substance of group control and management can justify treating separate VAT-registered companies as one business so that decision‑makers’ knowledge is attributable to the appellant companies.
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 indicated (not as a strictly binding ratio) that criminal convictions of a principal may be admissible and relevant to assessing credibility and role within a group, and that consistent low mark-ups and recurring supplier/customer links may point to non-arm’s-length, facilitation arrangements rather than genuine market trading.