By virtue of section 69C VAT Act 1994 (‘the Act’), HMRC is empowered to refuse any claim for the allowance of ‘input tax’ in any situation where it believes that the amount claimed arises or may arise from any transaction, or series of transactions, where a fraud designed to avoid payment of Value Added Tax (‘VAT’) is being or has been committed.
Tim Thompson of Kangs Solicitors outlines the content of section 69C of the Act.
The team at Kangs Solicitors is highly accredited for advising clients in relation to every aspect of tax disputes involving HMRC and defending clients accused of involvement in MTIC, VAT carousel frauds and Kittel cases.
For an initial no obligation discussion, please call our VAT Team at any of our offices detailed below:
The Law | Kangs VAT Assessment Dispute Solicitors
Transactions connected with VAT fraud
Section 69C of the Act provides that:
- a person is liable to a penalty where
- that person has entered into a transaction involving the making or receiving of a supply and
- the transaction was connected with the fraudulent evasion of VAT by another person before or after the transaction was entered into and
- that person knew or should have known (‘the Kittel Principle’) that the transaction was connected with the fraudulent evasion of VAT by another person and
- HMRC has issued a denial decision in relation to the supply:
- preventing that person from exercising or relying on a VAT right in relation to the supply,
- based on conditions leading to the fraudulent nature of the transaction, and
- satisfying conditions of relevant case law.
HMRC VAT Investigations | Carousel Fraud | Kangs HMRC Dispute Solicitors
HMRC conduct investigations into the VAT affairs of all individuals and companies suspected of being involved in an alleged fraudulent operation.
Innocent companies and individuals often find themselves accused of fraudulent carousel trading given that at some point their identity appeared within the carousel chain of transactions, sometimes without their knowledge.
In situations where HMRC concludes that the innocent individual or company knew, or should have known, that the transaction was connected with the fraudulent transaction(s), HMRC has the power to issue substantial financial penalties as well as pursue prosecution proceedings through the criminal courts.
The Kittel Principle | Kangs VAT Expert Solicitors
The Kittel principle derives its title from a Belgian Case of 2008 and provides that a VAT-registered business can be denied otherwise legitimate input tax relief if it knew or should have known, that the underlying transactions were fraudulent.
For further details please read our article on the Kittel Principle by following this link:
How Can We Assist? | Kangs VAT & Tax Solicitors
Upon receipt of any form of notification from HMRC indicating that they have denied payment of your Input Tax and/or issued a penalty against you, it is essential that you seek immediate specialist advice.
The team at Kangs Solicitors is well equipped to assist with all aspects of tax disputes with HMRC whether of a criminal or civil nature.
We can assist in the following ways:
- Prepare an application for Internal Review by HMRC
- Prepare an application for Independent Review by HMRC
- Appeal to the Tax Tribunal including the First-tier Tribunal and the Upper Tribunal
- Advise in relation to HMRC civil tax investigations
- Advise in relation to HMRC criminal investigations
We welcome new enquiries by telephone or email.
Our team of lawyers is available to meet at our offices in London, Birmingham or Manchester or, alternatively, we are happy to arrange an initial no obligation meeting via telephone or video conferencing.
For initial enquires please contact: