How CTM Defends Kittel VAT Appeals: Evidence, Witnesses and Advocacy

How CTM Defends Kittel VAT Appeals: Evidence, Witnesses and Advocacy

Defending a Kittel VAT appeal requires far more than producing a schedule of HMRC’s allegations or assembling a due-diligence file. The objective is to establish what really happened in the business, identify what the taxpayer knew at the time and present a coherent case that stands up to detailed questioning before a Tribunal.

Further information about Kittel disputes can be found on our Kittel and VAT Disputes page.

The strongest evidence often comes from the trader’s normal business

One of the most revealing exercises is to compare the transactions HMRC says were connected with fraud against transactions which HMRC does not dispute. If both types of transaction followed the same commercial arrangements, that matters. For example, the absence of written contracts should not be presented as uniquely suspicious if the business routinely traded without them on unquestioned deals. Similar comparisons may be made on suppliers’ backgrounds, negotiations, prices, invoicing and payments.

CTM does not simply accept HMRC’s description of an indicator. Each factual assertion must be tested against the actual records and, where relevant, evidence of genuine industry practice. A point which appears unimportant at the start can become influential during oral evidence or cross-examination. It is therefore essential to examine every allegation and preserve the ability to address it, even though submissions to the Tribunal must remain focused and proportionate.

The Baird appeal: a practical demonstration

G.M.P. Baird Ltd & Ors v HMRC [2025] UKFTT 1540 (TC) is a striking example. HMRC relied on numerous supposed warning signs, including inadequate due diligence, invoice similarities, suppliers without substantial trading histories, limited commercial documentation and alleged back-to-back trading. The business faced denied input VAT together with penalties against the company and its directors.

The Tribunal accepted that the directors had been insufficiently rigorous about due diligence. It did not, however, treat that failing as the end of the case. Physical scrap was received and processed, prices were negotiated, and the business operated in the same way with legitimate suppliers as with those whose chains contained defaulters. The evidence did not establish that the Bairds had the means of knowing that fraud was the only reasonable explanation for the transactions.

The judge and tribunal member also examined the distinction between trade practices that appeared unusual to HMRC and what was actually normal in that business. The Tribunal allowed the appeals despite its strong criticisms of due diligence. CTM’s Liban Ahmed handled the case without counsel, including the advocacy and cross-examination of HMRC witnesses.

PTGI: preparation for a major contested hearing

In PTGI-ICS Limited v HMRC [2022] UKFTT 20 (TC), CTM instructed counsel in a case involving approximately £19.2 million of denied input VAT. The 13-day hearing involved extensive documentary evidence and several witnesses. The appeal succeeded.

The result underscores the importance of distinguishing legitimate commercial transactions conducted in a sector exposed to fraud from transactions whose circumstances prove the required Kittel knowledge.

Witness statements are built from understanding, not templates

A statement should explain the witness’s real role, what they personally knew, why decisions were made and what the documents show. It should not be a polished narrative imposed on the witness. CTM spends substantial time discussing events with clients, reconciling recollections with contemporaneous records, and preparing witnesses for the pressure of giving honest evidence under cross-examination.

Preparation also requires anticipating the legal significance of the evidence. An apparently routine trading decision may matter because it answers a particular inference advanced by HMRC. Conversely, not every page of a large bundle deserves equal emphasis when presenting the case. The skill lies in knowing the records thoroughly, selecting what assists the Tribunal and being ready to explain documents if they become relevant during the hearing.

The hearing is not a scripted exercise

An effective hearing often changes shape as witnesses give evidence. An HMRC officer may concede that an assumption was not investigated; a director may clarify an important commercial practice; the judge may focus on a question that had appeared secondary. The representative must recognise the significance of those developments, take instructions when appropriate, cross-examine robustly but fairly, and adapt submissions to the issues the Tribunal is actually considering.

CTM reviews publicly available decisions and the procedural approach of the allocated judge where appropriate, while recognising that each case must be decided impartially on its evidence and the law. Written and oral submissions are tailored to the issues, the judicial questions and the facts proved, not to a generic template. This is practical litigation experience that cannot be reduced to automated document analysis.

Further information can be found on our Appeals to the Tax Tribunal page.

Sometimes HMRC withdraws before the hearing

CTM has recently acted in three further disputes in which HMRC withdrew its case shortly before the scheduled hearings after receiving the defence case. These matters are not named here to protect client confidentiality, and a withdrawal is not a published judicial finding. They nonetheless demonstrate that rigorous preparation can influence the outcome even when a case does not proceed to judgment.

We explain more about why preparation matters in any HMRC dispute in HMRC Tax Assessments: Why HMRC Does Not Always Get It Right.

What CTM Adds

The service clients need in a serious tax appeal goes further than generic submissions. We provide independent analysis of the allegations, first-hand understanding of HMRC investigations, witness preparation, examination of the evidence, cross-examination and persuasive advocacy as the case develops in front of the Tribunal.

CTM’s work is focused on that complete process. We prepare cases as cases to be argued and tested, not simply documents to be filed. If HMRC has denied input VAT or alleged knowledge of fraud, specialist representation can help identify the issues early and also prevent errors being made in responses to investigating officers.