Block-Aid Limited v The Commissioners for HMRC
[2024] UKFTT 339 (TC)
Heartlands House Limited v The Commissioners for HMRC
1 September 2023
[2023] UKFTT 747 (TC)
First-tier Tribunal
A construction company was denied VAT repayments because the tax office thought they hadn't done enough work to deserve them. The company argued they had, even though they were slow to get paid. A judge agreed with the company, saying they did enough work, even if they were disorganized.
Key Facts
- •Heartlands House Limited (appellant) appealed HMRC's disallowance of input tax repayment claims for VAT periods 09/19, 06/20, and 09/20.
- •The appeal focused on the 09/19 assessment (£28,221.96), with the appellant accepting the other assessments were correct due to errors.
- •The appellant is a construction company subcontracting work, registered for VAT in October 2018 (backdated to June 2016).
- •The dispute centered on whether the appellant made taxable supplies, despite delays in pursuing debts from clients (RPH Developments and Countrywide Estate Partnership).
- •Significant input tax related to Caihma Construction Limited, a subcontractor that was later dissolved.
- •HMRC argued insufficient evidence of taxable supplies due to delayed payment pursuit, lack of correlation between invoices, and missing planning permissions.
- •The appellant provided contracts, tenders, and evidence of payments to suppliers, although payment from clients was significantly delayed and less than contracted amounts.
- •HMRC raised concerns about the credibility of the company and missing supplier links but did not allege VAT fraud.
Legal Principles
A taxable person is entitled to credit for input tax attributable to taxable supplies.
VAT Act 1994, s26(1)
Outcomes
Appeal upheld.
The Tribunal found sufficient evidence of the appellant's intention to make taxable supplies and that supplies were made, despite delays in payment and poor business management. The lack of rigorous due diligence was deemed insufficient to negate the evidence of taxable supplies. The Tribunal found the appellant's director to be a reliable witness.