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

We accept that there are differences between the facts of this case and those considered in Boyce, Petroma and Scandico. In Boyce and Scandico, the appellants did not hold valid VAT invoices, while in Petroma, the invoices were incomplete. Here, the Appellant asserts that valid invoices existed, albeit they had not been produced to HMRC.

However, we nevertheless find the case law summarised above to be of assistance. In Scandico at [40], the UT held as follows:

“What the case officer decided is that, in the absence of VAT invoices from Apple to Scandico, there was not enough information provided by Scandico for HMRC to decide whether there has been a taxable supply or not. HMRC
has therefore exercised the discretion conferred on it by regulation 29(2) of the VAT Regulations 1995 by declining to direct that the alternative evidence that Scandico provided should be treated as sufficient evidence of the supply of the iPhones to Scandico. That is the decision which has been taken by HMRC and hence it is the decision that can be appealed and it is the decision that the tribunal should address.”

That passage is relevant to this appeal for three reasons:

In both Petroma and Scandico, the appellant provided further material after the tax authority had made its decisions. At [56], the UT relied on Petroma to find that:

“where the Member State tax authority adopts a decision refusing the right to deduct VAT because the information provided by the taxpayer is incomplete or irregular, the Sixth VAT Directive did not require the tax authority to revisit that decision when further information was provided after the decision has been taken.”

The UT went on to find that “[t]his must apply equally to the PVD as to the Sixth VAT Directive” and “the position should be no different where the further information is provided to a tribunal in the context of an appeal against the initial refusal”. Here, the Appellant did not provide the invoices to HMRC before Officer Mills made his decision.

It is clear from Boyce that the FTT’s jurisdiction when hearing an appeal against a Regulation 29(2) decision is supervisory: Arnold J said “[t]he exercise of such a discretion can only be challenged by the taxpayer on the ground that it was a decision that no reasonable body of Commissioners could have reached.” The same point is made in Scandico at [43] by reference to Kohanzad.

We also accept, of course, that Article 178 of the PVD only requires that the Appellant hold valid VAT invoices at the time of supply in order to have the right to deduct. However, as set out earlier in this Decision, paragraph 4(1) of Sch. 11 to VATA additionally provides that HMRC may as a condition of allowing or repaying input tax to any person, require the production of such evidence relating to VAT as they may specify. Mr Brown did not submit that this provision was overridden by, or otherwise inconsistent with, Article 178, and was plainly correct not to do so. In Petroma, the CJEU upheld national legislation which refused the right to deduct where (a) an invoice was incomplete at the time of the tax authority’s decision, but (b) the taxpayer later provided the missing information. Similarly in this case, HMRC had the statutory power to require the Appellant to provide the Verity invoices, and as that information was not supplied, the Appellant could not rely on Article 178.

Officer Mills exercised his discretion under Regulation 29(2) and decided that the evidence which had been made available was insufficient to support the input tax claims made. It is clear from Boyce and Scandico that the FTT’s jurisdiction is limited to considering that decision, and that this is a supervisory jurisdiction. In other words, the FTT must decide whether the officer in question had acted as no reasonable officer could have acted.

In making the preliminary decision, the FTT came to the same conclusion, and this was not an error of law. We thus reject the Second Ground of appeal.