Mini Umbrella Companies (“MUCs”) Success at Tribunal (Labour Supply; Kittel fraud; Fini fraud)

05 October 2023

Iain MacWhannell, instructing David Bedenham, successfully represented an employment intermediary in an appeal against a denial of input tax and £15 million VAT assessment.

The intermediary had purchased (and on-supplied) labour from thousands of mini-umbrella companies. HMRC subsequently denied the intermediary’s input tax on the Kittel and Fini basis. 

The appeal was listed for a 10 day hearing before the Tax Tribunal.

On day 1, HMRC opened their case by setting out their detailed basis for applying the Kittel and Fini principles. 

On day 2, David opened the Appellant’s case. This included drawing on the extensive evidence filed on behalf of the Appellant and raising numerous other challenges to highlight the flaws in HMRC’s case.

On day 3, HMRC applied for an adjournment. That application, which was opposed by the Appellant, was refused by the Tribunal. 

HMRC then announced in open court that they were withdrawing their Kittel/Fini decision and VAT assessment in full. The Tribunal then ordered HMRC to pay the Appellant’s costs. 

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