How to win an MTIC Appeal

How to Win an MTIC Appeal

Winning an MTIC (Missing Trader Intra-Community) appeal requires specialist knowledge, thorough preparation, and experienced representation. This guide covers the key areas you need to understand.

KITTEL Investigations and Appeals

HMRC’s Kittel investigations target businesses suspected of involvement in VAT fraud chains. The denial of input tax can run into millions of pounds, and the consequences for directors personally are severe.

Outsourcing Payroll — The Kittel Principle

The Kittel principle has been extended beyond traditional goods transactions. HMRC now applies the same approach to payroll outsourcing arrangements and other service-based transactions where fraud is alleged in the supply chain.

MTIC Statutory Review

Before reaching the Tribunal, taxpayers are entitled to a statutory review of HMRC’s decision. This is an important stage that should not be treated as a formality. A well-prepared statutory review submission can resolve the matter without the need for a full hearing.

Increase Your Chance of Success at Tribunal

There are three stages to an MTIC appeal, each requiring specialist advice. Success depends on thorough preparation at every stage.

Three key principles for success:

1. Never dismiss HMRC’s allegations. Take every point seriously and address each one with evidence. Dismissing allegations as absurd, even when they appear to be, does not impress the Tribunal.

2. Supply evidence proving patterns are not exclusively fraudulent. HMRC will seek to show that the trading patterns are consistent with fraud. The taxpayer must demonstrate that the same patterns are also consistent with legitimate trade.

3. Retain experienced representation. MTIC appeals are highly specialised. General tax advisors and solicitors without specific MTIC experience are unlikely to achieve the best outcome.

Do You Need a Specialist Tax Barrister?

Yes. MTIC cases are among the most complex matters heard by the Tax Tribunal. A specialist tax barrister with experience in Kittel appeals is essential.

Fees

Counsel fees for MTIC appeals typically range from £45,000 to £55,000+ for a one-week hearing. While this is a significant outlay, it must be weighed against the sums at stake, which often run into millions.

Know Your Judge

Different Tribunal judges have different approaches to MTIC cases. Understanding the judge’s previous decisions and judicial approach can inform the presentation of the case.

Cross Examination

Cross-examination of HMRC’s witnesses is a critical part of any MTIC hearing. This is where a specialist barrister’s experience is most valuable.

Important Parts from Previous Judgements

Case law in this area is extensive and constantly evolving. Identifying and relying on the most relevant passages from previous judgments is essential to a successful appeal.

What Do HMRC Need to Prove?

HMRC must establish that:

• There was a fraudulent tax loss in the supply chain.
• The taxpayer’s transactions were connected to that fraud.
• The taxpayer knew or should have known that their transactions were connected to fraud.

Personal Penalties

Directors face personal penalties of 30% of the denied input tax. This is in addition to the company’s liability and can be pursued regardless of the company’s solvency.

Are Legal Fees Refunded on Success?

Generally, no. The Tax Tribunal operates a no-costs regime, meaning each party bears its own costs regardless of the outcome. However, costs may be awarded in cases of unreasonable conduct.

Contact Us

For specialist advice on MTIC and Kittel appeals, contact Liban Ahmed on 07738 666548 or by email at liban@ctmlaw.co.uk.