IMPACT CONTRACTING SOLUTIONS LIMITED v THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS [2023] UKUT 00215 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Edwin Johnson,Upper Tribunal Judge Thomas Scott |
| Subject Matter | 1 September 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 01 September 2023 |
Neutral Citation: [2023] UKUT 00215 (TCC) Case Number: UT/2022/000076
UPPER TRIBUNAL
(Tax and Chancery Chamber)
Rolls Building, 7 Rolls Building,
Fetter Lane, London EC4A 1NL
VALUE ADDED TAX – preliminary issues – scope of “Ablessio” principle in relation to
HMRC’s powers to remove the registration of a person for VAT where that person has
facilitated the VAT fraud of another – whether such powers are contrary to UK VAT legislation
– whether HMRC can deregister a taxpayer in reliance on Ablessio where that taxpayer has
made supplies untainted by fraud which exceed registration threshold – whether deregistration
breaches EU law principles
Heard on: 19 May 2023
Judgment date: 01 September 2023
Before
MR JUSTICE EDWIN JOHNSON
JUDGE THOMAS SCOTT
Between
IMPACT CONTRACTING SOLUTIONS LIMITED Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Daniel Margolin KC, Iain MacWhannell and David Bedenham,
instructed by Joseph Hage Aaronson LLP
For the Respondents: Howard Watkinson and Joshua Carey, instructed by the General
Counsel and Solicitor to His Majesty’s Revenue and Customs
1
DECISION
INTRODUCTION
1. Impact Contracting Solutions Limited (“ICSL” or “the Appellant”) operated in the labour
provision market. Its customers were temporary work agencies and its suppliers were
approximately 3,000 mini-umbrella companies (“MUCs”) which supplied labour. On 16
September 2019, HMRC decided to cancel ICSL’s VAT registration number with immediate
effect. That decision was made in reliance on the principle in the decision of the Court of Justice
of the European Union (the “CJEU”
1
) in Valsts ienemumu dienests v Ablessio SIA (C-527/11)
(“Ablessio”). HMRC considered that ICSL was registered for VAT principally or solely to
abuse the VAT system by facilitating VAT fraud, and that, in such circumstances, they were
empowered by the principle in Ablessio to cancel the registration. In particular, HMRC
considered that the arrangements between ICSL and the MUCs were contrived, with the effect
that the MUCs failed properly to account for VAT on their supplies to ICSL.
2. By reference to the same transactions which it considered justified deregistration, HMRC
also denied ICSL various credits for input tax. That decision was the subject of a separate
appeal by ICSL.
3. ICSL appealed against HMRC’s decision to cancel its registration. The First-tier Tribunal
(Tax Chamber) (the “FTT”) directed that there be a hearing to determine various preliminary
issues in relation to that appeal. Those preliminary issues were as follows:
Question 1
Does the principle in Ablessio apply only to a party that has itself fraudulently
defaulted on its VAT obligations, or does it similarly apply to a party who has
facilitated the VAT fraud of another party?
Question 2
If the principle in Ablessio does apply to a party who has facilitated the VAT
fraud of another party, is simple facilitation sufficient, or must it additionally
be proved that:
(a) the facilitating party was itself dishonest; or
(b) the facilitating party knew that it was facilitating the fraud, and/or
(c) the facilitating party should have known that it was facilitating the
fraud?
4. The FTT concluded as follows in relation to these two questions, as set out at [106]-[108]
of its decision:
Question 1
106. The principle in Ablessio applies both to a party that has fraudulently
defaulted on its VAT obligations and to a party who has facilitated the VAT
fraud of another party.
Question 2
107. Simple facilitation by a party of the VAT fraud of another is not sufficient
to apply the principle in Ablessio.
108. It is not necessary to prove that the facilitating party was itself dishonest.
It must, however, be proved that the facilitating party knew or should have
known that it was facilitating the VAT fraud of another party.
1
We use this abbreviation to refer both to the CJEU and to the Court of Justice of the European Communities.
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