The FTT has allowed the taxpayer’s appeal in W. Reilly Ltd v HMRC [2026] UKFTT 641 (TC). The FTT held that HMRC failed to demonstrate that, having regard to objective factors, the taxpayer should have known that it was participating in transactions connected with fraudulent evasion of VAT. The judgment reconfirms that whether a taxable person “should have known” this requires a relatively high threshold; it does not suffice that circumstances are such that a taxable person should have known that by his purchase it was more likely than not that his transaction was connected with fraudulent evasion.
Dilpreet K. Dhanoa acted for the successful taxpayer.
The full judgment is available here: https://caselaw.nationalarchives.gov.uk/ukftt/tc/2026/641
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