Key Facts
- •Block-Aid Limited appealed VAT assessments totaling £78,385 (originally £79,760) for three periods.
- •Assessments disallowed input VAT due to allegedly cash-paid invoices.
- •HMRC conducted a pre-arranged meeting, correspondence, and a criminal fraud investigation (later dropped).
- •The dispute centered on whether sufficient evidence supported the input tax claims, despite the presence of invoices.
- •The appellant argued that the supplies were made and the cash payments were legitimate.
- •HMRC argued that the appellant failed to provide sufficient evidence beyond the invoices to prove the underlying services were performed.
Legal Principles
Input tax is allowable if (a) there's a taxable supply of goods/services used for business purposes, and (b) it's supported by a VAT invoice or alternative evidence.
Sections 24, 25, and 26 of the VAT Act 1994, and Regulation 29 of the VAT Regulations 1995.
The burden of proof to show the assessment is incorrect rests with the appellant.
Case law and accepted legal practice.
HMRC can require evidence beyond a VAT invoice to demonstrate that a supply was actually made, even if the invoice itself is valid.
Interpretation of Section 26 of the VAT Act 1994 and case law analysis.
Outcomes
The Tribunal upheld the assessments, except for the input tax related to vehicle purchases.
The appellant failed to provide sufficient evidence to prove the supplies of haulage, tyres, groundworks, and security services were made, despite the existence of invoices. The lack of supporting documentation, inconsistencies in the appellant's testimony, and the unusual nature of the business dealings with Torrap led to this decision.
Input tax on vehicle purchases was allowed.
The appellant provided sufficient evidence (V5C transfer, bank statements, and checks) to prove the vehicle transactions.