Successful Kittel Tribunal Appeal 2025

Successful Kittel Tribunal Appeal 2025

Kittel Tribunal appeals are won through hard work and expertise. Very few firms have any track record of success in these highly specialised cases.

Case Overview

Cheema Construction Services Ltd & Anor v Revenue and Customs [2025] UKFTT 92 (TC)

This case represents another successful outcome for a taxpayer facing HMRC’s denial of input tax on the basis of the Kittel principle.

Background

The appellant companies faced assessments from HMRC denying input tax on the grounds that their transactions were connected to VAT fraud and that they knew or should have known of that connection. The sums at stake were substantial, and the consequences for the directors personally were severe.

Legal Framework

The Kittel principle derives from the European Court of Justice decision in Kittel v Belgium. It provides that a taxpayer who knew or should have known that their transaction was connected to VAT fraud loses the right to deduct the input tax on that transaction.

For HMRC to succeed, they must establish:

• That there was a fraudulent tax loss somewhere in the supply chain.
• That the taxpayer’s transactions were connected to that fraudulent loss.
• That the taxpayer knew or should have known of the connection to fraud.

All three elements must be proved. If HMRC fails on any one of them, the taxpayer’s right to deduct input tax is preserved.

Key Issues and Findings

The Tribunal examined the evidence in detail, considering HMRC’s allegations and the taxpayer’s response. The quality of the evidence and the thoroughness of the preparation were decisive factors in the outcome.

Outcome

The appeal was allowed. The Tribunal found that HMRC had not discharged the burden of proof, and the taxpayer’s input tax claims were upheld.

Contact Us

If you are facing a Kittel assessment or MTIC investigation, contact Liban Ahmed, Tax Director, for a free initial consultation. With over 17 years of specialisation in this area, we have the expertise to give you the best possible chance of success.