TC09603 - [2025] UKFTT 00931 (TC)

It is not altogether straightforward to identify what it was that Officer Ross was deciding when she gave the first reason for denying the claims given that that reason was founded on the fundamental misapprehensions that both the Appellant and the Suppliers considered that the relevant supplies were exempt and that the circumstances were on all fours with those pertaining in Zipvit. Had Officer Ross not been under those misapprehensions, then I would have agreed with Mr Brown that, by concluding that no VAT had been charged, Officer Ross must have been concluding that the relevant supplies were exempt. That is because the payments made by the Appellant to the Suppliers were inclusive of VAT and therefore, if no VAT was charged, that could only be because the supplies were exempt. However, in my view, because of those misapprehensions, the statement by Officer Ross that no VAT had not been charged did not mean that she was concluding that the supplies were exempt. She was merely saying that, as had been the case for the appellant in Zipvit – which, after all, related to taxable supplies – the Appellant had not paid VAT and no VAT had become due from the Appellant.

The fact that Officer Ross had not definitively concluded that the supplies in question were exempt is supported by the statement at the end of her letter to the effect that “[if], at a future point [the Appellant] were to receive a current dated, VAT only invoice, and payment was made, then they would be entitled to deduct the input tax charged on the invoice”. Officer Ross would not have made that statement had she determined that the supplies were exempt.

Turning then to whether, conversely, the statement set out in paragraph 34 above should be construed as saying that the Respondents had accepted (by implication) that the supplies in question were taxable, it is tempting to conclude that it was. After all:

However, I have concluded that, notwithstanding these points, the statement should not be treated as expressing any decision by Officer Ross to the effect that the relevant supplies were taxable. Instead, it should be construed, in context, as simply another statement of fact which was subject to the unstated pre–condition that any deduction of VAT input tax could be made only if the supplies in question were in fact taxable, as to which the Respondents were expressing no view.

For the above reasons, I have concluded that, in the denial letters (and, for that matter, in the review conclusion letter), the Respondents made no decision as to whether the supplies made to the Appellant by the Suppliers were exempt or taxable. The only decisions which were made by the Respondents were that the claim to recover the VAT should be denied because: