The First Tier Tribunal dismissed the appeal from Turquoise 2 Ltd (T2) against HMRC’s decision to deny the company input tax deduction of £2,061,733.52 on purchases between May and August 2016.

The court ruled that the taxpayer, under the Kittel principles, should have known that the purchases were connected to the fraudulent evasion of VAT.

Symon Blomfield was the sole director of Turquoise 2 and in 2016, following the suggestion of an ‘occasional business associate’, the company started trading in electronic goods despite having no background in the industry.

To do this, the company had funding from what it believed to be a US entity referred to as ‘Adam’s organisation’ which was given control of Turquoise 2’s Latvian bank account after advising Turquoise 2 to open one there.

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