VATF44500 - Basic interventions: other interventions: deregistering businesses that misuse their VAT number
Source: gov.uk (2025-08-18)


When can you deregister a trader or prevent a trader from registering for VAT?

You can deregister a trader or prevent a trader from registering for VAT if:
- They are not undertaking VATDREG06000 (https://www.gov.uk/hmrc-internal-manuals/vat-deregistration/vatdreg06000) or intending on undertaking a taxable supply VATREG21900 (https://www.gov.uk/hmrc-internal-manuals/vat-registration-manual/vatreg21900)
OR
- They are misusing or intending to misuse their VAT registration number – the Ablessio principle
Below is some general guidance for officers on the above interventions:

De-registration guidance (https://www.gov.uk/hmrc-internal-manuals/vat-deregistration) and De-registering using Ablessio (https://www.gov.uk/hmrc-internal-manuals/vat-fraud/vatf86300)

Deregistering defaulters

Where a taxable person, who is involved in missing trader fraud (VATF23500 (https://www.gov.uk/hmrc-internal-manuals/vat-fraud/vatf23500)), has solely made taxable supplies and fraudulently defaulted on his VAT liability, there is no need to contact the VAT Serious Non Compliance & Fraud Team (“SNCF Team”) prior to deregistration. Instead a Regulation 25 letter should be sent to the taxable person, and if the taxable person is unable or unwilling to comply with their VAT obligations then they should be deregistered. Please see MTOG3700 of the Missing Trader Intra-Community Fraud Specialist Investigations Operational Guidance on issuing a Regulation 25 Direction.

In all other instances you must contact the SNCF Team (VAT Fraud Team on the intranet) before taking action. There is a specific template that must be used which can be found at VATF85300 (https://www.gov.uk/hmrc-internal-manuals/vat-fraud/vatf85300).

Ablessio Principle – the basics

This guidance focusses on the principles derived from the CJEU judgment in Ablessio (C527/11). This case has direct application into UK law.

Using the Ablessio principle HMRC can, in certain circumstances, either refuse to allow a taxable person to register for VAT or deregister a taxable person from VAT where following an overall assessment of all the facts of the case there is objective evidence to conclude that the taxable person is solely or primarily:
- committing a VAT fraud; or
- participating in transactions connected with VAT fraud i.e. they knew or should have known that their transactions are connected with VAT fraud; or
- intending on committing VAT fraud or participating in a fraudulent scheme
The essential element here is that there must be, or likely to be VAT fraud. Non-compliance, such as a failure to render VAT returns, does not amount to fraud unless there is evidence to show that the non-compliance is part of a VAT fraud or is seeking to mask a VAT fraud.

Ablessio - case summary

Ablessio builds on previous case law aimed at preventing abusive practices, but expands it to cover VAT registration.

Para 28 of Ablessio states that Member States: "......have a legitimate interest in taking appropriate steps to protect their financial interests, and the prevention of tax evasion, avoidance and abuse is an objective recognised and encouraged by Directive 2006/112 (see, in particular, Case C-255/02 Halifax and Others [2006] ECR I-1609, paragraph 71; Case C-285/09 R. [2010] ECR I‑12605, paragraph 36; and Case C-525/11 Mednis [2012] ECR, paragraph 31).

Para 30 states a Member State can, in accordance with Art 273 of PVD: "legitimately take measures that are necessary to prevent the misuse of identification numbers, in particular by undertakings whose activity, and consequently their status as taxable persons, is purely fictitious. However, these measures must not go beyond what is necessary for the correct collection of the tax and the prevention of evasion, and they must not systematically undermine the right to deduct VAT, and hence the neutrality of that tax (see, to that effect, Case C-146/05 Collee [2007] ECR I-7861, paragraph 26; Nidera Handelscompagnie, paragraph 49; Dankowski, paragraph 37; and VSTR, paragraph 44)."

Para 34 of Ablessio highlights the importance of carrying out an overall assessment when refusing a taxpayer the right to be VAT registered: "....must be based on sound evidence giving objective grounds for considering that it is probable that the VAT identification number assigned to that taxable person will be used fraudulently. Such a decision must be based on an overall assessment of all the circumstances of the case and of the evidence gathered when checking the information provided by the undertaking concerned."

At para 38 of the judgment the CJEU permits Member States to refuse to register traders where they believe the registration might be misused. Member States must consider the following: "....whether, having regard to all the circumstances of the case, the tax authority has established to the requisite legal standard the existence of sound evidence from which it may be concluded that the application for registration in the register of taxable persons subject to VAT by Ablessio might result in the misuse of the identification number or other VAT fraud."

In the Court of Appeal judgment (May 2025) in Impact Contracting Services Ltd (https://www.bailii.org/ew/cases/EWCA/Civ/2025/623.pdf) (EWCA Civ 623), the Court agreed with how HMRC applies Ablessio - as well as applying to a person that has itself fraudulently defaulted on its VAT obligations, it also applies where a person has not themselves fraudulently evaded VAT but has facilitated the VAT fraud of another. It also found that having untainted supplies did not preclude its use. However, the Court did stress that deregistration cannot be based on mere suspicion. The nature and degree of the seriousness of the infringements must be examined (paragraph 67). Furthermore, it should be applied proportionately using sound evidence based on an overall assessment. "[T]he proximity and extent of a facilitator's involvement in VAT fraud are likely to be relevant factors in determining whether the tax authority's action is proportionate on the facts, alongside other factors including the extent of the anticipated untainted supplies,..." (paragraph 72).

The Upper Tribunal considered the application of Ablessio in the case of Elphysic and others (https://www.bailii.org/uk/cases/UKUT/TCC/2025/236.pdf) [2025] UKUT00236. This decision was released shortly after the Court of Appeal judgment mentioned above (and was referred to by the UT). The circumstances were slightly different in that the person themselves was "the very means by which the fraud is being carried out" (paragraph 59). The UT continued that "[i]t would be inconsistent with the Ablessio principle to impose a requirement about the knowledge of the directors of the company in relation to VAT fraud in circumstances where it was the company's own VAT number that was the means by which the fraud was being carried out....". To do so would seriously undermine the effectiveness of Ablessio and its objective to make it more difficult for fraudulent transactions to be carried out.

Ablessio – the overall assessment

When considering whether to prevent the trader from registering for VAT or remove the trader’s VAT number, HMRC must undertake an overall assessment of all the circumstances of the case as per paragraph 34 of the Ablessio judgment.

Below is a list of factors to consider when undertaking an “overall assessment” of all the circumstances of the case:
- Are the trader’s transactions connected with VAT fraud? Can we evidence this?
- Do either the directors or others members of staff of the trader have any previous connections with missing trader fraud or other VAT fraud?
- Is there a credible business model?
- Does the trader advertise their goods and services?
- Are there any issues with the premises, i.e. is it suitable to carry out the type of trade?
- Are there inconsistencies on the VAT registration form?
- Do the transactions show features of contrivance, such as pre-arranged profit margins?
- Are there terms and conditions and are they followed?
- Has the trader used written contracts?
- Has the trader insured the goods?
- Are there any irregularities with the way payment is made? For example the use of alternative banking platforms or large cash payments?
- Has the trader undertaken appropriate due diligence checks on counterparties?
- Is there evidence to show that the trader is involved in an overall scheme with the primary aim of defrauding the public revenue?
This list is not exhaustive and the burden of proof is on HMRC to satisfy each point in order to prevent VAT registration or to deregister a trader.

The fact that there are also untainted supplies does not automatically mean that Ablessio is not approrpiate. The extent of the untainted supplies will be a factor to consider as part of the overall assessment of the evidence.

The above points should be outlined on your submission to the VAT SNCF Team.

It might be that you are considering using the Kittel (https://www.gov.uk/hmrc-internal-manuals/vat-fraud/vatf50000) intervention to deny input tax at the same time. The submission template allows for this and many of the facts and features will apply for both interventions.

It is important to remember that Kittel addresses past transactions connected with the fraudulent evasion of VAT whereas Ablessio is a forward-looking intervention and aims to prevent continued fraudulent or abusive use of a VAT registration.

This means that the tax losses relied upon (from a Kittel case for example) must be recent in time. If the tax losses do not appear in the most recent VAT periods, you will need to evidence that the abuse is either on-going or probable in future transactions. Just relying on a historical tax loss (such as from a Kittel decision) is unlikely to be seen as proportionate.

When to contact the VAT Serious Non-Compliance & Fraud Team

You must contact the SNCF Team to seek further guidance:
- where the taxable person you are seeking to deregister (or prevent from registering) is involved (or likely to be involved) in transactions connected with fraud. This would include buffers, brokers, contra traders and conduits: MTIC VAT Fraud
- In the case of defaulters, you should only contact our team where the taxable person has also undertaken legitimate commercial transactions untainted by fraud.
Where you believe that HMRC should deregister a trader, or prevent a trader from registering for VAT under the Ablessio principle you should write a submission using the following template VATF85330 (https://www.gov.uk/hmrc-internal-manuals/vat-fraud/vatf85330)

If you work in FIS the submission should be sent, via your line manager, to the Technical Team. The Technical Team will review the information contained within the template, and unless clarification or further evidence is needed, they will let you know whether they agree or disagree with your decision. If the case is unusual in any way, the Technical Team will send it to the SNCF Team.

If you work outside of FIS then you can send your submission template directly to the SNCF Team via the link on this page: VAT Fraud Team

SNCF will let you know whether they agree or disagree with your decision within 10 working days.

If the SNCF Team agree to apply Ablessio then they will send you the following template: VATF86300 dereg abuse lttr. doc (https://www.gov.uk/hmrc-internal-manuals/vat-fraud) for you to draft the letter to the trader informing them they will be deregistered or prevented from registering.

Contesting a refusal of registration/deregistration

The taxable person can request that a decision to deregister them is reconsidered by the decision-making officer or is reviewed by an independent officer.

A decision to deregister a taxpayer for VAT purposes using Ablessio is an appealable decision.

If a taxable person appeals an Ablessio decision the SNCF Team must be informed at the earliest opportunity.