POWA (Jersey) Limited v Commissioners for Her Majesty's Revenue and Customs
Decision date: 11 December 2009
Neutral citation: [2009] UKFTT 360 (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
PJL (Jersey) Ltd appealed HMRC's refusal to repay £1,018,181.89 of input VAT on 37 purchases of computer chips, HMRC alleging the purchases were part of chains connected with VAT fraud. The Tribunal found overwhelming evidence of fraud in the antecedent chains and that PJL's due diligence was superficial or a sham; key managers knew or had the means of knowing of the connection to fraud. Applying the Kittel principles, the Tribunal dismissed the appeal and refused the input tax repayment, awarding costs to HMRC.
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 objective factors demonstrate that a trader knew or had the means of knowing that a purchase was connected with fraudulent VAT evasion, the trader can be denied the right to deduct input VAT; superficial or formulaic due diligence that does not genuinely address known market risks can amount to having the means of knowing and justify refusal of repayment.
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 noted that HMRC's selective investigation or inconsistent allowance of other traders' claims does not by itself invalidate refusal of another trader's claim under Kittel. It also observed that a trader's failure to call key witnesses and absence of contemporaneous records are significant circumstantial indicators when assessing the genuineness of due diligence.