UT (Tax & Chancery) UT/2023/00099 - [2025] UKUT 00013 (TCC)

Mr Brown, for the Appellant, accepted that the FTT Grounds could have been drafted at greater length and in a different style. Nevertheless, in his submission, the FTT Grounds should be understood as engaging both the following:

Mr Brown submitted that construing the FTT Grounds as only engaging HMRC’s discretion to accept alternative evidence not only ignores the words used in those Grounds, it was contrary to the established principles of construction, and was precisely the “narrow and formalistic” way of reading grounds of appeal that was deprecated in R (Rodriguez-Torres) v SoS for the Home Department [2005] EWCA Civ 1328 (“Rodriguez-Torres”) at [17]. We set out the relevant paragraph from that case at §67.

Turning to the detail of the FTT Grounds, Mr Brown made the following submissions. He contended that they were framed by the “crisp, all-encompassing statement” that the Appellant’s “claim for input tax is valid and correctly due”. He said that since a person must hold a valid VAT invoice for a claim for input tax to be valid (see reg. 29(2) VAT Regs 1995) the existence of the invoices was thus implied.

He went on to say that the Appellant then identified the key issue as being Officer Mills’ decision as to whether “enough evidence of the input tax deducted” had been provided. He said that Officer Mills had decided as a matter of fact the Appellant did not hold the relevant invoices when making the input tax deduction, and this reference too showed that the Appellant was including as one of its grounds, that it did hold those invoices.

In relation to the list at paragraph 7 of the FTT Grounds, Mr Brown submitted that the Appellant was pleading, succinctly and concisely, that:

He emphasised paragraph 7(d), which said that the Appellant “holds evidence that its supply chain is valid”, and “has correctly been charged VAT [to its suppliers]”, and paragraph 7(g), which said that as a result of the other points made in paragraph 7, HMRC had “no valid grounds” for rejecting the input tax deduction.

Mr Brown submitted that had the Appellant only been engaging HMRC’s discretion to accept alternative evidence, different words would have been used, such as “based on the documents and information the Appellant has been able to provide to HMRC, HMRC should accept that the Appellant was entitled to deduct VAT input tax”. Moreover, nowhere in the FTT Grounds does the Appellant refer to HMRC’s residual discretion under reg. 29(2) to accept alternative evidence.

Mr Brown additionally relied on the fact that the Appellant’s Notice of Appeal, to which its separate grounds were attached, stated clearly and unequivocally that the “Desired outcome” was “we would like the Tribunal to vacate the assessment”.

He also submitted that the “invoice ground” should have been clear from the history of the matter, which provided the context to the FTT Grounds and made “the central issue” clear. He added that the FTT’s failure properly to understand the history and context was compounded by [42], which stated:

“The response from Aspire dated 21 January 2019 referred to Officer Mills having been previously provided with “a list of invoices relating to Week 10 (8th June 2018)…10 sample invoices from week 10” and proceeded to state “I can confirm that information pertinent to the August return is available”. I consider it is of note that the response from Aspire referred to “information pertinent to the August return” and not “invoices”. As noted, there is reference to “invoices” in the preceding part of Aspire’s letter indicating that a distinction was being made between “information pertinent to the August return” and “invoices”. Officer Mills responded on 25 January 2019 stating that in respect of Verity supplies he “would require evidence of the invoices that make up these individuals and a full listing of them all.” That response made clear that the documents previously provided by Aspire was not sufficient evidence. Accordingly, I reject Mr Brown’s submission that “information pertinent to the August return” was intended to confirm that valid invoices were in the Appellant’s possession. In my view, the response was clear and without ambiguity and I do not accept that such an intention can be ascribed to the clear wording used.”

Mr Brown submitted that the FTT here had misunderstood the Appellant’s letter of 21 January 2019 which had stated that “information pertinent to the August return is available. Please provide a schedule of records you wish to see in order to check the return and release the repayment”. Mr Brown said that this letter should have been construed in the context of HMRC’s request for all of the Appellant’s business records, and that there was no proper basis to read it as a formal acceptance that the Appellant did not hold purchase VAT invoices for VAT returns filed. He emphasised that HMRC were informed on 8 February 2019 that “the records which you have requested are available” and HMRC had been invited to propose dates to come and inspect them.

Mr Brown also criticised the FTT for referring at [43] to the statutory review letter, saying that this was “HMRC’s document using HMRC’s words”, and the Appellant had never suggested or stated it was relying on “sufficient alternative evidence”.

He also submitted that para [44] was plainly wrong. This reads:

“The suggestion that the Appellant was in possession of valid invoices at the time of the claim was made for the first time in a letter to HMRC dated 13 December 2020 by the Appellant’s newly appointed legal representatives, Duncan Lewis…”

In making that submission, Mr Brown relied on the provision of invoices on 8 October 2018, and also the fact that on 11 October 2018 the Appellant had told HMRC that each Verity amount was made up of between 800 and 1000 invoices from different suppliers.

Finally, Mr Brown criticised the FTT for having carried out “an impermissible ‘mini-trial’ of issues of fact in the course of the hearing.