The First Tier Tribunal (FTT) has rejected the appeal from Middlesex Wine Limited against a decision by HRMC to deny the company an input tax return of £581,104 as the court decided that the company should have known that its purchases over the 2016-17 VAT periods were connected with fraudulent evasion of VAT.

Middlesex Wine was incorporated in 2012 and was a wholesaler or ‘cash and carry’ seller of alcoholic beverages. The business was conducted on the basis that they did not pay suppliers prior to delivery.

When registering for VAT the company estimated that the value of the taxable supplies it would make in the next 12 months would be £300,000.

In 2012, HMRC contacted the company warning them that there was a high amount of VAT fraud in the alcohol market, another letter was sent in 2016. Between the letters, HMRC visited the company’s site four times between 2012-16.