Howard Watkinson and Joshua Carey successfully represent HMRC in multi-million pound Appeal

Howard Watkinson and Joshua Carey represented HMRC in the recent First-tier Tribunal (Tax Chamber) decision in CF Booth Limited -v- The Commissioners for HM Revenue and Customs. CF Booth Limited (“CFB”) is one of the leading metal recycling companies in the UK and has grown, since its establishment in 1920, from a local metal trader to one of the largest independently run recycling companies in Europe.

HMRC assessed CFB for output tax in the sum of £160,263.95 on the basis that it failed to demonstrate sufficient evidence of dispatch and in the alternative that it knew or should have known that the transactions it carried out were part of a tax fraud committed by its customer and it failed to take all reasonable steps within its power to prevent its participation in that fraud (the Mecsek-Gabona principle).

HMRC also denied CFB its input tax in the sum of £2,607,776.00 on the basis that it knew or should have known that its transactions were connected with the fraudulent evasion of VAT (the Kittel principle).

Judge John Brooks and Tribunal Member Gill Hunter in a lengthy and carefully reasoned decision found that CFB had failed to keep sufficient evidence of dispatch as required by Public Notice 725. The Tribunal noted that even if it had not found that there was insufficient evidence of dispatch it would have found that CFB knew or should have known that the transactions it carried out were part of a tax fraud committed by its customer and it failed to take all reasonable steps to prevent that participation.

The Tribunal went on to find in the Kittel part of the case that CFB knew that its transactions were connected with the fraudulent evasion of VAT. It went on to find that if it was wrong about this, the only reasonable explanation for the transactions was that CFB should have known that its transactions were connected with the fraudulent evasion of VAT.

This decision is significant not simply because it was against a large metals recycler but also because it marks the first Mecsek-Gabona case to make its way through the Tribunal.

Howard and Joshua are specialist indirect tax barristers with significant experience working both for and against HMRC. They are available for instruction across all indirect tax matters and other cases involving serious financial wrongdoing in both the civil and criminal courts.

Howard and Joshua were skillfully instructed by Victoria O’Brien of the HMRC Solicitor’s Office.