TC09665 - [2025] UKFTT 01252 (TC)

The burden of proof in this appeal was on the Appellant to show on a balance of probabilities, that either it had valid VAT invoices to support the input tax claim or that HMRC unreasonably refused to accept alternative evidence.

The Appellant accepts that it has not produced VAT invoices for most of the input tax claim and has not supplied to HMRC good alternative evidence. Mr Murphy accepts in hindsight he should have kept better records, but he did not at the time realise he had to because this was before he was advised that the Appellant could register for VAT.

Insofar as the Appellant has produced invoices, we agree with HMRC that they do not meet the conditions in Regulation 14.

In our view HMRC has given the Appellant every opportunity to demonstrate it was entitled to recover the input tax claimed in the 09/22 return. We accept Ms Wilkinson’s evidence that had suitable alternative evidence such as bank statements, an accurate purchase ledger or VAT account been provided she would have exercised HMRC’s discretion in Regulation 29(2) and considered accepting the alternative evidence. However, we agree that in the circumstances HMRC was entitled to decline to exercise its discretion under Regulation 29(2) as the Appellant failed to produce suitable alternative evidence to justify input tax recovery.

Decision

We therefore find that in respect of those supplies where the time of supply predates the effective date of registration the Appellant is not entitled to reclaim its input tax.

Further, we find that the invoices produced to us did not comply with Regulation 14(1). Finally, we find that as regards the entire claim for input tax (whether evidenced by such invoices or not) the Appellant has not established that HMRC was unreasonable in refusing to exercise its discretion under Regulation 29(2) to accept alternative evidence.

The Appellant is therefore not entitled to the input tax claimed in the 09/22 return.

Accordingly, the Appellant’s appeal is dismissed.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.