TC09555 - [2025] UKFTT 00748 (TC)

When the VAT and Further VAT Assessments were issued HMRC denied input tax exceeding a sum Officer Beard calculated as reasonable by reference to the annual accounts 3KH having failed to provide any records from which HMRC were able to verify the claims.

Subsequently HMRC were provided with ledgers and purchase invoices for 04/15, 10/15, 01/16, 07/16, 10/16, 01/17 and 04/17. These were scheduled and reviewed by Officer Beard who determined on an invoice-by-invoice basis whether to allow the input tax claim. Where the input tax element of the assessments as raised resulted in a greater restriction to input tax recovery than was evidenced through the invoices which were considered to be acceptable, the assessments were reduced.

For periods where the purchase invoices were not provided a general disallowance of 20% was made for VAT periods in the accounting period ended 31 July 2015, 39% in VAT periods within the account period ended 31 July 2016, 31% in VAT periods within the account period ended 31 July 2017 and 31% in all other periods (31% representing the average disallowance calculated from the three periods for which annual accounts were available).

Thus, the final assessed sums deny input tax where the sum claimed on the returns are not supported by purchase invoices and/or where specific invoices have been denied subject to a fair allowance where not invoices were provided. In our view there can be no challenge to the input tax assessments save by reference to specific invoices on which input tax was denied.

The Appellant contends that input tax in connection with the following invoices should be permitted: