Tower Bridge GP Limited v The Commissioners for Her Majesty's Revenue & Customs, TC 07026
| Jurisdiction | UK Non-devolved |
| Judge | Rupert JONES |
| Judgment Date | 05 March 2019 |
| Neutral Citation | [2019] UKFTT 0176 (TC) |
| Respondent | The Commissioners for Her Majesty's Revenue & Customs |
| Appellant | Tower Bridge GP Limited |
| Reference | TC 07026 |
| Court | First-tier Tribunal (Tax Chamber) |
[2019] UKFTT 0176 (TC)
TC07026
Appeal number: TC/2013/03349
VAT – Value Added Tax – Invalid invoices – Regulations 14 and 29 of VAT
Regulations 1995 – conformity with EU law – Principal VAT Directive -
discretion to accept alternative evidence – reasonableness of discretion – the
decision maker whose discretion is subject to scrutiny – denial of input tax for
periods 06/09 & 09/09 – carbon credit trading – missing trader intra
community fraud - Kittel – knowledge or means of knowledge of connection
to fraudulent evasion of VAT – assessments for periods 06/09 & 09/09 under
section 73 Value Added Tax Act 1994 (“VATA”) – whether an assessment was
made for period 06/09 as a matter of law – Aria Technology Ltd – whether
appeal allowed in part
FIRST-TIER TRIBUNAL
TAX CHAMBER
TOWER BRIDGE GP LIMITED
Appellant
- and -
THE COMMISSIONERS FOR HER
MAJESTY’S
Respondents
REVENUE & CUSTOMS
TRIBUNAL:
JUDGE RUPERT JONES
Sitting in public at the Rolls Building, London on 6, 7, 8, 9, 12, 16, 19, 20, 21, 22 &
23 March 2018
Nicola Shaw QC and Michael Jones of Counsel, instructed by Pinsent Masons
solicitors, for the Appellant
James Puzey, Howard Watkinson and Joshua Carey of Counsel, instructed by the
General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
Supplementary written submissions on behalf of the Appellant & HMRC made on
29 March, 9 July, 31 August, 21 November & 19 December 2018
2
Index
Paragraph Number
Introduction
1
The Decisions under appeal
2
The issues in the appeal
25
The Evidence
32
The First Issue – denying input tax on the Stratex
invalid VAT invoices when substantive conditions for
the charge of VAT under the PVD are met
41
The Facts on the First Issue
42
The Law on the First Issue
45
Appellant’s submissions on the First Issue
84
HMRC’s submissions on the First Issue
160
Discussion and Decision on the First Issue
181
Conclusion on the First Issue
217
The Second Issue – reasonableness of discretion to
deny input tax on the invalid Stratex invoices
218
Facts on the Second Issue
223
Law on the Second Issue
235
HMRC’s submissions on the Second Issue
251
Appellant’s submissions on the Second Issue
267
Discussion and Decision on the Second Issue
295
Conclusion on the Second Issue
344
The Third Issue – denial of input tax based on Kittel –
knowledge or means of knowledge of MTIC fraud
345
Facts on the Third Issue
354
Law on the Third Issue
1223
HMRC’s submissions on the Third Issue
1288
Appellant’s submissions on the Third Issue
1308
Discussion and Decision on the Third Issue
1332
Conclusion on the Third Issue
1601
The Fourth Issue – whether there was an assessment
for period 06/09 as a matter of law
1608
The Law on the Fourth Issue
1610
The Facts on the Fourth Issue
1616
Appellant’s submissions on the Fourth Issue
1648
Discussion and Decision on the Fourth Issue
1667
Conclusion on the Fourth Issue
1692
The Fifth Issue – whether assessments were made
within the time limit under section 73(6)(b) VATA
1696
Law on the Fifth Issue
1704
Facts on the Fifth Issue
1715
Appellant’s submissions on the Fifth Issue
1912
HMRC’s submissions on the Fifth Issue
1979
Discussion and Decision on the Fifth Issue
2004
Conclusion on the Fifth Issue
2060
Conclusion on all issues and disposal of the appeal
2062
3
DECISION
Introduction
1. The Tribunal begins by thanking counsel and the representatives for both parties for their
assistance before, throughout and after the hearing. It would not have been possible to decide
an appeal such as this without their cooperation and professionalism. The Tribunal apologises
for the length of time it has taken to release this decision, a draft of which was circulated for
corrections on 11 February 2019.
The decisions under appeal
2. The Appellant, Tower Bridge GP Limited (“Tower Bridge”), appeals against the
following decisions of Her Majesty’s Revenue and Customs (“HMRC”).
Denial of Input Tax
3. The first set of decisions under appeal are those of HMRC to deny the Appellant input
tax in respect of VAT periods 06/09 and 09/09 in a decision dated 6 December 2012 (‘the
Decision’) as varied by HMRC’s review in a decision dated 12 April 2013 (‘the Review
Decision’) and by an amendment to the Review Decision on 25 June 2013.
4. The Decision of 6 December 2012 was to refuse to grant the Appellant the right to deduct
input VAT incurred on purchases of carbon credits in VAT periods 03/09, 06/09 and 09/09.
HMRC denied the Appellant input tax totalling £36,330,792.25 (this included denials of
£690,294.29 in respect of 03/09, £34,317,697.80 in respect of 06/09 and £1,322,800.16 in
respect of 09/09).
5. The purchases of carbon credits were made by two members of the VAT group of which
Tower Bridge is the representative, Cantor CO2e Limited (“CO2e”) which arranged and
undertook the relevant transactions, and Cantor Fitzgerald Europe Ltd (“CFE”) which executed
the relevant transactions and received and issued the relevant invoices.
6. CFE and CO2e will be referred to collectively as “CFE” unless the distinction between
the two is of relevance. CFE may also be referred to as “the Appellant” unless the distinction
becomes meaningful.
7. The first effect of the Review Decision was to uphold part of the Decision denying input
tax on the basis that invoices to CFE from Stratex Alliance Ltd (“Stratex”) were invalid. The
second effect was to withdraw that part of the Decision which decided that input tax should be
denied on invoices from other suppliers to CFE on the basis they were invalid VAT invoices.
8. The third effect of the Review Decision was to change the date at which HMRC
contended that CFE first knew or should have known that the transactions upon which input
tax was claimed were connected with the fraudulent evasion of VAT. The effective date for
CFE’s knowledge / means of knowledge was moved from 18 May 2009 to the later date of 8
June 2009 (with the exception of the decision in relation to Stratex invoices where it remained
18 May 2009).
9. The result of the Review Decision was no longer to deny input tax in respect of period
03/09 and reduce the amount of input tax disallowed from £36,330,792.25 to £7,126,810.14
(£5,804,009.98 in respect of 06/09 and £1,322,800.16 in respect of 09/09).
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