AC-2023-LON-000068 - [2025] EWHC 2312 (Admin)

The VIT 31200 statement of policy is headed “How to treat input tax: alternative evidence for claiming input tax” and is part of the VAT Input Tax section of the manual. It has a hot-link contents list as follow:

A passage on dissolved companies follows. The Guidance continues:

“Factors for HMRCstaff to consider when exercising discretion where the supply is not of goods specified in the Invalid Invoice Statement of Practice

HMRC staff should refer to the VAT input tax deduction without a valid VAT invoice: Revised Statement of Practice (link is external).

The factors will vary depending upon the individual circumstances of the taxpayer. Example questions are contained at Appendix 2 of the Statement of Practice and are listed below. These are only examples, they are not absolute and not all questions will be appropriate to all taxpayers. HMRC staff should prepare bespoke questions that suit the individual circumstances of the taxpayer’s business.

Invalid Invoice Statement of Practice: Appendix 2

Questions to determine whether there is a right to deduct in the absence of a valid VAT invoice

• Do you have alternative documentary evidence other than an invoice (for example a supplier statement)?

• Do you have evidence of receipt of a taxable supply on which VAT has been

charged?

• Do you have evidence of payment?

• Do you have evidence of how the goods/services have been consumed within

your business or evidence about their onward supply?

• How did you know the supplier existed?

• How was your relationship with the supplier established? For example:

• How was contact made?

• Do you know where the supplier operates from (have you been there?)

• How do you contact them?

• How do you know they can supply the goods or services?

• If goods, how do you know they are not stolen?

• How do you return faulty supplies?

Where:

• the supply is of goods not specified as subject to widespread fraud and abuse; and

• the taxpayer can provide satisfactory alternative evidence of the supply (questions 1-4); and

• there are no grounds to suspect abuse or fraudulent intent on the part of the claimant

HMRC staff should normally exercise their discretion to allow the taxpayer to deduct the input tax.

Where a taxpayer fails to provide satisfactory alternative evidence of the taxable supply then it will not be authorised to deduct. Where HMRC staff intend to deny a taxpayer its right to deduct, and the supply is not specified, they can proceed without seeking endorsement from VAT Fraud Team (VFT) except in SI cases covered by the SI VAT governance process.

Factors for HMRC staff to consider when exercising discretion where the supply is of goods specified in the Invalid Invoice Statement of Practice

Goods subject to widespread fraud and abuse are listed in Appendix 3 of the Invalid Invoice Statement of Practice. This list differs from the statutory definition used when considering Joint and Several Liability (see Notice 726 (link is external)) Joint and several liability for unpaid VAT.

Invalid Invoice Statement of Practice: Appendix 3

Supplies of goods subject to widespread fraud and abuse [etc a list is given – not relevant here]