Share this content

Diversification? Then do your Due Diligence!

8th Apr 2022
Share this content

The main business of the Tasca Tankers Ltd is the manufacture of road tankers. It is a well-established business with ‘direct contact and negotiation discussions with customers.’ An opportunity presented itself for some diversification into the sale of upmarket vehicles. According to the FTT decision, this would increase profitability whilst reducing VAT liability. Presumably this is because sales would be zero-rated as exports to the Republic of Ireland. In contrast to the road tanker business, the vehicle business was much less ‘formal!’

Following contact from the Irish Revenue authorities, HMRC investigated and (1) denied zero-rating because of a lack of evidence of dispatch; and (2) denied input tax because, they alleged, the transactions were related to VAT fraud.

The company submitted two separate appeals to the Tax Tribunal.

The FTT decision [2021] UKFTT 25 followed an application by HMRC that the input tax Appeal be struck out since it had no prospect of success. The FTT allowed the company’s appeal. HMRC appealed this to the Upper Tier. The Upper Tier overturned the Appeal and remitted it back to the First Tier to be heard by a differently constituted Tribunal. The overall process is interesting and the logic of the Upper Tier is worth a read. There is lots of nuance, so takes some re-reading at some points!

Of course, had the company undertaken more comprehensive ‘due diligence’ when it diversified into car dealing, it would have found itself in a much stronger position.

This is the Upper Tier decision: Revenue & Customs v Tasca Tankers Limited [2022] UKUT 88 (TCC) (18 March 2022) (

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.