The FTT rejected the company’s appeal against HMRC’s refusal to allow input tax to be credited in relation to the purchase of plant and machinery. Nine purchases had been made from vendors who had subsequently become “missing” and who had not declared the VAT that had been charged on the sales. The FTT judged the Appellant either “knew or should have known”,  that in eight of the nine cases there was a likelihood of fraud. No allegation is made against Peterborough Plant Sales, but as the end-user they have become responsible for the missing VAT. It is clear as these judgments are issued that if you are in a supply chain it is extremely important that you carry out due diligence to ensure that your counterparties are legitimate and competent especially when it comes to VAT. HMRC have issued new guidance on this and it is vital that traders affected obtain a copy and read it. They offer guidance on things you should do for your due diligence, but the onus remains on the taxpayers to use their judgement and to be able to demonstrate how they reached the decisions they made