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

The FTT Grounds did not state that valid invoices were held by the Appellant at the time of submitting the relevant VAT return; they were instead “entirely predicated on the absence of such invoice”. Reliance on invoices as a ground of appeal was first raised in a letter dated 13 December 2020, after the Appellant had changed its advisers from Aspire to Duncan Lewis Solicitors ([40]-[44]).

The decision made by Officer Mills refusing the right to deduct VAT was made on the basis that the Appellant had not provided VAT invoices. In the absence of valid VAT invoices, Officer Mills exercised the discretion conferred on him by Reg.29 VATR and did not accept that the Appellant had provided HMRC with sufficient alternative evidence ([45]).

The correct approach to be followed was that in Scandico Ltd v HMRC [2017] UKUT 0467 (TCC) (“Scandico”), which was binding on the FTT, not the two-stage test in London Wiper Limited v HMRC [2011] UKFTT 445 TC ([46] – [47]).

The Tribunal should only address the HMRC decision that was before it, viz. the decision that, in the absence of VAT invoices, HMRC were not prepared to exercise their discretion to accept the alternative evidence provided by the taxpayer, and the test the FTT applies in reviewing that decision is that set out in Kohanzad v Customs & Excise Commissioners [1994] STC 967 (“Kohanzad”), namely whether the officer in question had acted as no reasonable officer could have acted. The FTT’s jurisdiction in the appeal was therefore supervisory ([48]).

The Appellant had accepted that if this was the position, it could only rely on evidence that was before Officer Mills when he made his decision. In consequence, the Appellant could not rely on the Verity invoices as these were not provided to Officer Mills before he issued the assessment ([49]).