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

The PVD is given effect domestically by VATA and the VAT Regulations 1995 (“VATR”). VATA and the VATR are EU-derived domestic legislation, as defined by s.1B(7) of the European Union (Withdrawal) Act 2018 (“EUWA”). Section 2 of EUWA provides that EU-derived domestic legislation, as it had effect in domestic law immediately before IP completion day (i.e., 31 December 2020) continues to have effect in domestic law on and after that day.

Section 4 VATA provides for the general charge to VAT on supplies of goods and services. Section 24 VATA defines “input tax” and “output tax”. Section 24(6)(a) VATA provides that regulations may provide for VAT to be treated as input tax:

“...only if and to the extent that the charge to VAT is evidenced and quantified by reference to such documents or other information as may be specified in the regulations or the Commissioners may direct either generally or in particular cases or classes of cases;”

Sections 25 and 26 VATA then provide for “input tax” to be deducted from “output tax” for each VAT accounting period. Section 25(6) provides that a deduction for allowable input tax under s.25(2) and payment of a VAT credit shall not be made or paid except on a claim made in such manner and at such time as may be determined by or under regulations. The relevant regulations are the VATR.

Paragraph 2A of Sch.11 to VATA provides the power to make the regulations in respect of VAT invoices. Paragraph 4(1) of Sch. 11 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.

Regulation 13(1) VATR requires that where a registered person makes a taxable supply in the UK to a taxable person it must provide a VAT invoice. Regulation 14(1) VATR then sets out the required contents of a VAT invoice (such that it will be valid) with a number of particulars specified in (1)(a)-(p).

Regulation 29 VATR provides:

“(1)

…save as the Commissioners may otherwise allow or direct either generally or specially, a person claiming deduction of input tax under section 25(2) of the Act shall do so on a return made by him for the prescribed accounting period in which the VAT became chargeable save that, where he does not at that time hold the document or invoice required by paragraph (2) below, he shall make his claim on the return for the first prescribed accounting period in which he holds that document or invoice.

…

(2)

At the time of claiming deduction of input tax in accordance with paragraph (1) above, a person shall, if the claim is in respect of-

(a)

a supply from another taxable person, hold the document, which is required to be provided under regulation 13;…

…

provided that where the Commissioners so direct, either generally or in relation to particular cases or classes of cases, a claimant shall hold, or provide, such other evidence of the charge to VAT as the Commissioners may direct.”

Regulation 29(2)(a) VATR therefore requires that in order to make a claim for a deduction of input tax, the taxpayer must hold a valid VAT invoice (which is to be provided to its customer in compliance with Regulation 13(1) and in a form compliant with Regulations 13(2) and 14) or, where HMRC so direct, hold or provide such “other evidence of the charge to VAT as the Commissioners may direct” (usually referred to as “alternative evidence”).

Regulation 31 VATR imposes record keeping requirements on taxable persons.