Upper Tribunal Tax and Chancery Chamber

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

Fecha: 22-Oct-2024

Implications

Implications

122.

Mr Watkinson expressed concerns about the wider consequences were the Appellant to succeed in this appeal. Although we did not rely on those submissions in coming to our Decision, we nevertheless agree with them. Mr Watkinson said that:

(1)

Admitting evidence which was not before the HMRC decision-maker would allow appellants:

(a)

to provide all kinds of evidence for the first time to the FTT;

(b)

to refuse to provide evidence to HMRC which they would otherwise be required to provide only for it to be produced on appeal to the FTT; and

(c)

to delay or withhold the payment of VAT properly due.

(2)

Permitting taxpayers to side-step the effect of HMRC exercising a discretion over the sufficiency of evidence provided in support of a VAT claim would permit tactical avoidance and delay, and result in wasteful litigation.

(3)

It would also undermine HMRC’s ability to manage the VAT system, by signalling that lawful and reasonable requests for the production of valid VAT invoices can be either ignored or delayed.

123.

We agree with Mr Watkinson that the operation of the VAT system is not a game to be played by taxpayers. When HMRC requests or requires that a taxpayer produces a valid VAT invoice in support of its claim to input tax deduction, it is doing nothing more than enforcing the European and domestic law that requires that such an invoice be held at the time of the exercise of the right to deduct. Where the taxpayer refuses a lawful and reasonable request, it puts itself in a position whereby the claim to input tax deduction is then a matter for the discretion of HMRC. If HMRC exercises that discretion against the taxpayer, the taxpayer cannot then, on appeal to the FTT, produce the invoice, as a surprise or ambush, even if it truly held the invoice all along, and so side-step the exercise of HMRC’s discretion.

124.

We also observe that in exercising its statutory jurisdiction, the FTT is well able to decide whether or not the HMRC Officer acted unreasonably, for instance by requesting information which was irrelevant, or by refusing to accept an invoice was valid. However, that was not this case.