TC09666 - [2025] UKFTT 01253 (TC)

Fecha: 09-Sep-2025

Alternative evidence for the BHNV Invoice

Alternative evidence for the BHNV Invoice

60.

Where the trader does not hold a Regulation 14 compliant invoice then, under Regulation 29(2) HMRC may direct that a taxpayer should hold evidence other than a VAT invoice. The Tribunal’s jurisdiction is a supervisory one, and it is for the taxpayer to show on the balance of probabilities that on the basis of the material before HMRC, no body of Commissioners could reasonably have come to the conclusion that it did.

61.

Ms Brickell, having decided that the BHNV Invoice did not meet the requirements of Regulation 14, declined to exercise HMRC’s discretion to accept alternative evidence. Ms Brickell had a large number of reasons for doing so, which centred on the credibility of the fees charged between the parties which were owned by individuals who knew or were otherwise in a broad sense connected to each other. For example:

(1)

There was a fee for introducing the Property when at the time BHNV and the Appellant were owned by the same individuals.

(2)

As the Property had been found in April 2022 prior to the incorporation of the Appellant, the Property could not be introduced to the Appellant for a second time in October 2022.

(3)

The £60,000 fee for managing the sale and legal work seemed odd when Fladgates was already acting.

(4)

The £40,000 fee for advising sophisticated directors on change of use for one unit seemed excessive.

(5)

No evidence was provided to explain what work was done to justify a £40,000 fee for researching opportunities to increase rents.

(6)

There was no contract for the services provided by BHNV.

(7)

Two firms of solicitors acted for the Appellant on the purchase.

(8)

The services appeared to have been provided at a time when BHNV and the Appellant had the same directors and were under common control.

(9)

The evidence provided by the Appellant was often contradictory in nature and focused on Barry Glass’s involvement in sourcing the property and undertaking due diligence to package a deal that would be attractive to incoming investors prior to exchange of contracts.

(10)

No substantive evidence was provided to determine what taxable services BHNV provided, that these were provided to the Appellant or the agreed terms of reference and terms of payment.

(11)

Documentary evidence was essential as the directors of BHNV were also acting as common directors and shareholders of both the Appellant and BHNV up to 10 August 2022, being the period when due diligence activity was likely to have been undertaken in preparation for exchange of contracts on 5 August 2022.

(12)

The legal services referenced in BHNV’s invoice had been provided to the Appellant by Fladgates.

(13)

The Appellant had been incorporated as a special purpose vehicle and the Property was originally sourced by Barry Glass and Avi Ratzersdorfer. There was therefore no requirement for the Appellant to pay fees for the Property to be sourced a second time, or to pay for an introduction between BHNV, Colridge and the Appellant when all parties were already known to each other.

(14)

Fees in respect of any introductions made to Mr and Mrs Dreyfuss as incoming investors should logically have been invoiced to them individually, or to Eurocent Group Ltd if Mr and Mrs Dreyfuss were acting on behalf of this entity.

(15)

There was no tangible evidence of services provided by BHNV to the Appellant,

(16)

The invoice was not paid for by the Appellant.

(17)

There was significant confusion in the information received from the Appellant’s agent because it was unclear who his ‘client’ was and at what time.

(18)

Prior to its incorporation any services provided by BHNV could only have been provided to Mr and Mrs Dreyfuss, either as individuals or as directors of or investors in Eurocent Group Ltd, both entities being non-taxable persons unable to deduct VAT on services received.

62.

The overall conclusion reached by Ms Brickell was that the Appellant had provided insufficient and unsatisfactory alternative evidence and she declined to exercise her discretion under Regulation 29(2).

63.

Mr Levine sought to address in brief some of the concerns raised by HMRC. For example, there being two solicitor firms engaged was explainable in that Fladgates had been instructed but when Mr and Mrs Dreyfuss acquired the Appellant they wanted their solicitors BNI to be involved from the company perspective rather than the purchase. Further, it was not unusual for a group of property companies to have one company that operates a central banking function. However, overall Mr Levine was not in our view able to address the structural issues, particularly in the absence of witness evidence.

64.

As we have said it is unnecessary for us to decide whether HMRC were unreasonable to decline to exercise its discretion under Regulation 29(2) in respect of the BHNV Invoice. However, for completeness had the BHNV Invoice not met the conditions in Regulation 14(1), we would have declined to interfere in HMRC’s decision. We find that HMRC had identified a large number of issues concerning the transactions. Whilst some answers had been provided, we cannot say that the Appellant has shown on the balance of probabilities that on the basis of the material before HMRC, no body of Commissioners could reasonably have come to the conclusion that it did.