TC09672 - [2025] UKFTT 01262 (TC)

Before considering HMRC’s grounds for the application it is convenient to cover first an argument made by the Appellant as to the application of Regulation 111.

The Appellant argues that HMRC’s strike out application must in any event fail because Regulation 111, dealing with pre-registration and/or pre-incorporation expenses, imposes a time limit on HMRC’s ability to assess. That being the case HMRC assessment is out of time and, in effect, the strike out application irrelevant.

On the Appellant’s argument input tax on goods can be claimed up to 4 years before the effective fate of registration and 6 months for services (Regulation 111(2)(b) and (d)).

Regulation 111(2) provides insofar as relevant:

“(2)

No VAT may be treated as if it were input tax under paragraph (1) above—

(a)

…

(b)

subject to paragraph (2A), (2C) and (2D) below, in respect of goods which had been supplied to, or imported or acquired by, the relevant person more than 4 years before the date with effect from which the taxable person was, or was required to be, registered;

(c)

…

(d)

in respect of services which had been supplied to the relevant person more than 6 months before the date with effect from which the taxable person was, or was required to be, registered; or

(e)

…

(2A)…

(2B) In paragraph (2) above references to the relevant person are references to—

(a)

the taxable person; or

(b)

in the case of paragraph (1)(b) above, the person to whom the supply had been made, or who had imported or acquired the goods, as the case may be.”

Thus, on the Appellant’s argument, as the EDR is 1 April 2020, input tax can be reclaimed on goods from 1 April 2016 and for services 1 October 2019. HMRC are subject to the same time limit and so it’s ability to challenge the Appellant’s claims under Regulation 111 expired on 1 October 2020 for services and 1 April 2024 for goods.

I do not accept the Appellant’s argument. Leaving aside that HMRC assessed on 8 February 2024, within the Appellant’s time limits for goods, in my view it is clear that Regulation 111 does not impose any time limit on HMRC’s ability to assess. To the extent there is a time limit it is on a newly registered or incorporated taxpayer’s ability to backdate its claim. The time limits on HMRC’s ability to assess are to be found in sections 73 and 77 VATA and set limits based on the prescribed accounting period in which the input tax is claimed. Here the earliest such period is July 2020. No argument has been put forward to me based on those provisions.

I therefore reject the Appellant’s argument.