A & A Contractors Midlands Limited & Anor v The Commissioners for HMRC
Decision date: 27 July 2026
Neutral citation: [2026] UKFTT 1093 (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
A&A Contractors Midlands Ltd and its director KS appealed HMRC decisions denying input VAT, issuing a VAT assessment and penalties, and deregistering the company. The Tribunal found supplier transactions were connected to fraudulent VAT evasion but that A&A did not know and should not have known of that connection until 24 June 2020 (two days after a tax‑loss/VETO notice dated 22 June 2020), so denial of input tax, the assessment and penalties were limited to transactions after that date; the deregistration was upheld. Adjustments to KS’s personal liability mirrored the reduced period.
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
A trader who receives a tax‑loss/VETO notification identifying a direct supplier traced to tax losses must make reasonable enquiries into that supplier (and materially similar suppliers) before entering further transactions; if the trader fails to make those enquiries, subsequent purchases may be treated as connected to fraudulent VAT evasion (i.e. the trader is treated as having known of the connection) unless the trader proves that no reasonable enquiry would have revealed the fraud.
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 that (a) there is no general obligation to perform extensive due diligence on all suppliers absent indications of fraud and (b) factors such as rapid commercial success, informal practices or limited director experience do not by themselves establish knowledge or imputed knowledge of supplier fraud; HMRC due‑diligence guidance is not compulsory.