Nicholas McLeman highlights HMRC’s powers to tackle VAT fraud throughout supply chains.
As HMRC’s understanding of fraud and the approach of the Courts in dealing with fraud continues to evolve, landmark cases often shape the scope and direction of how HMRC uses its investigation powers.
One such ground-breaking ruling that has had a significant impact on how HMRC approaches VAT fraud cases was Kittel v Belgium 2006.
In July 2006, the ECJ released the Kittel judgement, which established that a taxable person’s right to deduct input tax will be lost not just where their transactions relate to VAT fraud, but also where that person ‘knew or should have known’ that their transactions were connected with the fraudulent evasion of VAT conducted by another party.
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