HMRC wins £920k VAT dispute with London builder

A London construction company has lost an appeal over recovery of nearly £1m in input tax as transactions linked to fraudulent invoices and Kittel fraud

At the First Tier Tribunal (FTT), the owner of Harry Construction Limited (HCL), of north London, accepted that ‘the VAT losses arose through dishonesty on the part of the defaulting traders’, but tried to blame HMRC for failing to alert him about the risks.

HCL is a commercial construction business based in north London, and the company appealed against a number of HMRC decisions on input tax issued on 1 February 2019, relating to three separate notifications.

In total, the input tax in dispute was £927,987, which HCL claimed should have been repayable by HMRC.

Two instances related to decisions to deny the company the right to deduct input tax totalling £705,741 over the VAT periods 10/15-07/18 on the basis that HMRC said the company ‘knew or should have known that its transactions upon which the input tax reclaim was based were connected with VAT fraud’.

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