HMRC loses out on £500k after assessing appellant too late

A significant tax bill and penalty for a construction recruitment agency over potential Kittel VAT fraud was out of time meaning the appellant only had to pay £229,000

DJJ Services, run by Diven Laxman, provides labour to construction sites, and reported a rapid hike in turnover in a short space of time.

The company appealed HMRC’s decision to refuse to deduct input tax of £710,678, which had been built up between 2015-18, as well as a £64,414 penalty.

At the First Tier Tribunal (FTT) HMRC admitted that the assessments pre-dating the 2017-18 tax year were brought out of time, conceding almost £500,000 of the tax in dispute, reducing the overdue tax to £229,908 in total.

HMRC questioned some of the dealings of DJJ’s operation, saying that the company dealt with fraudulent suppliers and that it should have been aware of this, particularly when it made purchases that were traced to tax losses which were the result of fraud.

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