TC09603 - [2025] UKFTT 00931 (TC)

Fecha: 30-Jul-2025

the background to the appeal

the background to the appeal

The claim made by the Appellant in the ECN was accompanied by a letter to the Respondents from the Appellant’s representative, the VAT People (the “VATP”), setting out the background to the claim. In that letter, after explaining the circumstances in which the relevant supplies had been made, the VATP requested “[the Respondents’] agreement to accept alternative evidence to support the claim given that both suppliers are clearly taxable persons but are not VAT registered and have not provided VAT invoices to [the Appellant]”. The VATP went on to explain the reason why it considered that the relevant supplies were taxable before asking for the Respondents’ comments on its analysis. It then referred the Respondents to the section in the VAT manual which dealt with the acceptance of evidence other than a VAT invoice to support a claim for VAT input tax recovery and explained that the Suppliers had not provided VAT invoices in this case because they had taken the view that the relevant supplies were not taxable.

The claim made by the Appellant was denied by Officer Carolyn Ross of the Respondents on 15 December 2022. In her response, the reason given by Officer Ross for denying the repayment of VAT was that:

“At the time the supplies took place both the supplier and the customer accepted that the supplies were exempt from VAT. No VAT was charged, and no invoices were raised charging VAT.”

“Your representative has stated that the decision letter suggests that you would be entitled to recover the VAT should you receive a VAT invoice from your suppliers. They have taken from this that HMRC accepts that Flux and HIC’s supplies should have been treated as standard rated for VAT.

It should be noted that Officer Ross explained “if you were to receive a current dated, VAT only invoice and payment was made, then you would be entitled to deduct input tax charged on the invoice.”

Officer Ross has advised that she did not imply that the supplies your received from Flux and HIC should have been treated as standard rated. It is my view that the above statement made by Officer Ross is correct and would likely refer to any subsequent agreement between you and your suppliers on the treatment of the supplies.

Your representative also considers that Officer Ross has assumed that you and the suppliers agreed that, at the time, the supplies made by you were VAT exempt and they have explained that this is not the case. You have advised that you specifically raised this point in May 2015. Your representative has advised that Flux sought advice from their representative who was of the view that commission payments were exempt from VAT. Flux were satisfied with that response, but this was not agreed by you.

Officer Ross has detailed that at the time the supplies took place both the supplier and the customer accepted that the supplies were exempt from VAT. This would seem clear by the fact that no invoices were raised, and no VAT was charged. There is no evidence to suggest that you have made any previous claims for input tax on this matter or declared input tax with your VAT returns. You also did not advise HMRC that you were unhappy with the tax treatment of those supplies or would seem to have contacted Flux/HIC further on this matter.”