Mobilx Ltd (In Administration) and others v HMRC

21 Jun 2010

On 12 May 2010, the Court of Appeal gave judgment on three joined appeals from the High Court in relation to missing trader intra-Community (“MTIC” or “carousel”) fraud.

The principal question before the Court of Appeal was, as Moses LJ put it, whether HMRC was entitled under European Union law to refuse the input VAT claims of the appellant and respondent traders on the basis that those traders knew or should have known that the transactions in respect of which they claimed the VAT were or were likely to be connected with fraud.

The Court of Appeal was asked to rule on what conditions must be met before HMRC can refuse an input VAT claim from a trader in a chain of transactions in which there has been identified a tax loss resulting from MTIC fraud. This meant their Lordships addressing for the first time a number of inconsistent High Court and tribunal decisions, and being asked to provide the clarity of a single authoritative statement of the law from a higher court.