Marabella - Tax Court finds that invoices issued in the wrong name resulted in lost input tax credit claims

In the course of a construction business, a registrant paid invoices from a subcontractor, which demanded payment to a number of GST-registered corporations that did not in fact provide the services in question.  Instead, these corporations were involved in a false invoicing scheme and none of the GST collected from the registrant was remitted.

Batiot J. found that the registrant was not entitled to ITCs as the suppliers named in the invoices in fact had not supplied it with services - and a good faith mistake in accepting these invoices fell short of establishing a due diligence defence.  The findings in this case would be troubling if they were applied to the situation where one company in a corporate group issues invoices for work that was done by another group company.

Scott Armstrong.  Summary of Les Constructions Marabella Inc. v. The Queen, 2012 TCC 397, under s. 169(4).