MTIC Fraud Appeal – Airtime

MTIC Fraud Appeal – Airtime

Case Details

Case: TC/2017/02223, PTGI-ICS Limited v HMRC

Input tax denied: Approximately £19.2 million across VAT periods 06/15 to 03/16

Judge: Asif Malek

Hearing: 13-day hearing in September 2021

Evidence: 12 electronic evidence bundles comprising approximately 5,000 pages, with 5 witnesses giving evidence

Counsel: Mr Bedenham, instructed by CTM

The Appeal

HMRC had denied input tax of approximately £19.2 million on the basis that PTGI-ICS Limited knew or should have known that its transactions in the airtime sector were connected with MTIC fraud.

Decision

The appeal was allowed. The Tribunal found that the directors of PTGI-ICS Limited did not know, nor should they have known, of any connection between their transactions and fraud.

Key Legal Principles

The distinction between suspicion and legal proof was critical to the outcome of this case. The Tribunal reinforced the principle that a heightened risk of fraud in a particular sector is insufficient, on its own, to deny input tax.

HMRC must establish that the “only reasonable explanation” for the circumstances of the transactions was a connection to fraud. Mere suspicion or the existence of risk factors in the supply chain does not meet this threshold.

CTM’s Track Record

This case represented CTM’s 8th successful MTIC appeal and the 2nd within 5 months, further demonstrating the firm’s expertise in defending businesses against fraud allegations in complex VAT disputes.