TC09665 - [2025] UKFTT 01252 (TC)

HMRC’s first reason for denying input tax recovery is that most of the supplies predate the EDR and so input tax cannot be recovered under general rules but must satisfy the additional conditions set out in Regulation 111(2), that is the goods must not have been consumed:

“(2)

No VAT may be treated as if it were input tax under paragraph (1) above—

(a)

in respect of—

(i)

goods or services which had been supplied, or

(ii)

save as the Commissioners may otherwise allow, goods which had been consumed,

by the relevant person before the date with effect from which the taxable person was, or was required to be, registered;”

As set out below, we were taken to 6 of the invoices produced by the Appellant. 4 predated 1 August 2022, one postdated it and one did not have the relevant year so it was not possible to tell.

The Appellant did not address this issue either in correspondence or in the hearing. The Appellant produced no evidence that the goods were still held by the Appellant at EDR and not “consumed”. Indeed, it was the Appellant’s clear case both in its grounds of appeal and in correspondence that they had been used before 1 August 2022. The point was not taken by either party but we note Regulation 111(2)(ii) appears to permit HMRC some discretion.

We agree that insofar as the time of supply of the purchase of the relevant goods predates registration, Regulation 111 applies and the Appellant must satisfy the conditions in Regulation 111(2)(a)(ii). Insofar as the input tax claim relates to supplies predating the EDR we therefore find that the Appellant is not entitled to claim the relevant input tax.