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

The appellant in Boyce had appealed to the FTT against a decision made under Regulation 29(2) to disallow the repayment of input tax in the absence of satisfactory purchase invoices. In allowing Mr Boyce’s appeal, the FTT had considered “the totality of the evidence before it, which included evidence provided by Mr Boyce in the context of the appeal”, see [8] and [10] of the UT judgment.

Arnold J said at [14]:

“The proviso to regulation 29(2) confers a discretion on HMRC to accept
alternative evidence to the purchase invoice which a person claiming
deduction of input tax must ordinarily have. The 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: see Customs
and Excise Commissioners v Peachtree Enterprises Ltd [1994] STC 747 at
752 (Dyson J) and Kohanzad v Commissioners for Customs and Excise [1994]
STC 967 at 969 (Schiemann J). The burden lies on the taxpayer to demonstrate
this, based on facts and matters available to HMRC at the time the decision
was taken.”

At [23] he endorsed the following proposition put forward by Counsel for HMRC, which set out in the preceding paragraph (italics in original):

“The FTT had failed to keep in mind when assessing the Commissioners’ decision that: (i) the rule, as a matter of both EU and UK VAT law, is that without a valid invoice there can be no input tax deduction; (ii) the use of the discretion in regulation 29(2) involves creating an exception to that rule; and (iii) it is therefore entirely reasonable for the Commissioners to insist on strict adherence to that rule unless and until the taxpayer can demonstrate why an exception to it should be made.”