TC09513 - [2025] UKFTT 00523 (TC)

We were provided with a substantial bundle of documents. Mr Helle, who presented the case for the appellant, also gave oral evidence. Mrs Helle, who was also present at the hearing, chipped in from time to time. From this evidence we find as follows:

In 2022 the appellant’s business was constructing new residential properties. It seems, therefore, that the supplies made by the company during this period were predominantly zero rated.

For the VAT period 04/22, the appellant claimed input tax credit of £88,107.91 in its VAT return for that period.

In November 2022, HMRC opened an enquiry into this return. In an email dated 24 November 2022, HMRC sought information and records concerning the appellant’s business. Following a visit to the appellant’s premises on 9 December 2022, further information was sought by HMRC.

There was further correspondence between the parties between December 2022 and February 2023 during which time the appellant provided certain information, but this was, in HMRC’s view, inadequate to verify the VAT recovery claim made in the appellant’s return.

A second meeting between the parties took place in February 2023 following which there was further correspondence concerning the evidence which HMRC required to verify the recovery claim in the return.

On 15 March 2023, having been sent screenshots from the appellant’s accounting software showing that the returns for the VAT periods 04/22 and 07/22 had been submitted by the appellant, HMRC responded stating that the input tax credits for those periods would be reduced to nil as no evidence had been provided to substantiate the claims.

On 12 April 2023, HMRC issued two of the three appealable decisions. Firstly, in respect of the VAT period 04/22, they issued a letter adjusting the amount of input tax claimed in the return to 0, thus denying the appellant input tax credit of £88,170.91. Secondly, they issued a VAT assessment for £14,000 for the VAT period 07/22.

On 14 May 2023 the company requested an independent statutory review of these decisions.

HMRC’s review conclusion letter is dated 17 August 2023. It recorded that the appellant had been registered for VAT since 23 November 2014. It also recorded the history of the requests made by HMRC for information concerning the two VAT returns, and the information that had been supplied by the appellant. It concluded that the appellant had failed to provide the documents which were necessary to validate the appellant’s input tax recovery claims. Nor had it established (contrary to assertions made by the appellant) that it had been incorrectly charged VAT by its suppliers (or that VAT had been incorrectly collected from those suppliers). The reviewing officer therefore upheld the original decisions.

On 8 September 2023, HMRC issued their third appealable decision, namely an assessment for the output tax due for the period 04/22 arising as a consequence of the reduction of the input tax for that period, having been reduced to 0. That assessment is in the amount of £2,265.28. The appellant did not seek a statutory review of this assessment.

On 15 September 2023, in an email to HMRC, the appellant stated that it “will issue an appeal as recommended by you…” However, no such appeal was actually submitted until 11 March 2024.

Between September 2023 and March 2024, there was correspondence between the appellant and HMRC. In particular, on 20 February 2024, the appellant sent an email to the investigating officer, in response to a letter from HMRC indicating that they intended to destroy material that they had procured during the investigation, indicating that the appellant was “preparing clear evidence that we will present to the High Court-asking them to quash your decision…”.

A further email of 5 March 2024 sets out, once again, the appellant’s view of the strength of its position, and justification for the VAT recovery claimed in the relevant periods. In response to this letter, the investigating officer indicated that to take the matter further, the appellant needed to appeal to the tribunal requesting a late appeal.

Mr Helle’s evidence as to why he had taken so long to make the appeals was as follows. There was a difference between asking HMRC to review the April 2023 decisions and bringing an appeal against all three decisions. In order to bring his appeal, he wanted to be sure of his legal position (or rather, the legal position of the company). To do this he needed to review over 350 pages of documentation. He also wanted to clarify the position with HMRC. He had telephoned HMRC between 8 and 10 occasions. Sometimes HMRC answered whilst on other occasions they did not. When he spoke to HMRC personnel, they couldn’t advise him as to the correct VAT position. However, in the final telephone conversation which he held with an HMRC officer on 11 March 2024, and which precipitated the appeal, that officer told him that he was “VAT exempt”.

He further stated, and this was supported by Mrs Helle, that they had insufficient funds to take independent legal or accounting advice.

In summary Mr Redpath submitted as follows:

The appeal against the appealable decisions has been made more than five months late which is serious and significant.

No good reasons have been put forward by the appellant for this delay. No corroborating evidence has been provided to support Mr Helle’s testimony that he attempted to clarify the position with HMRC, on the telephone, between September 2023 and March 2024.

In any event, it was made expressly clear to the appellant in the appeal decisions themselves and in the statutory review conclusion letter, that the appellant had 30 days within which to bring its appeal. No technical knowledge was needed to interpret this information. It is set out as a matter of plain English.

The appellant’s underlying case is weak. It has had the opportunity to provide evidence to justify its input tax recovery claims but has failed to provide it. It is not clear whether the appellant is saying that it makes exempt supplies or zero-rated supplies. Presumably the latter as it is seeking to recover input VAT. If the appellant has been erroneously charged VAT on supplies to it, it must seek redress from its suppliers.

HMRC are entitled to rely on the statutory time limits set out in the legislation.

In summary Mr Helle submitted as follows:

The company had submitted nine VAT returns which had not been questioned by HMRC and in which HMRC had given the company the credit for input VAT which it had sought on those returns.

Following receipt of the review conclusion letter and the 8 September 2023 assessment for output tax, he wanted to make sure that his legal position was correct before he made an appeal. He therefore went through a very large volume of documentation and sought to clarify the legal position direct with HMRC over the telephone.

It was only on 11 March 2024 following a telephone conversation with an HMRC officer who confirmed the VAT status of the appellant, that he made the appeal on behalf of the company.

The company’s position is a strong one in that it is entitled to recover its input VAT.