Block-Aid Limited v The Commissioners for HMRC
[2024] UKFTT 339 (TC)
V-Com (Worldwide) Ltd v The Commissioners for HMRC
1 May 2024
[2024] UKFTT 368 (TC)
First-tier Tribunal
A company bought iPhones for its business, but the receipts weren't in the company's name. The tax office refused to let them claim back the tax, saying they needed proper invoices. The company appealed. The judge said the tax office needs to give proper reasons and a full hearing was needed to decide if their decision was fair, not just dismiss the appeal.
Key Facts
- •V-Com (Worldwide) Ltd appealed HMRC's decision to disallow input tax (£506,678.32) claimed for purchasing Apple iPhones.
- •The iPhones were purchased via employees, family, and friends using Apple till receipts (lacking the Appellant's name).
- •HMRC disallowed the claim due to the lack of valid invoices, despite the Appellant providing alternative evidence.
- •The appeal was stayed pending the outcome of *Scandico Ltd v HMRC* and *Zipvit Ltd v HMRC* before being reinstated.
- •HMRC applied to strike out the appeal under rule 8(3)(c) of the Tribunal Procedure Rules, arguing no reasonable prospects of success.
Legal Principles
Test for striking out an appeal under rule 8(3)(c): analogous to CPR r.3.4(2)(a), requiring a realistic, not fanciful, prospect of success. Avoids mini-trials.
HMRC v Fairford Group, The First De Sales Limited Partnership v HMRC
Right to deduct input tax: Generally requires valid VAT invoices complying with reg. 14(1)(e) of the VAT Regulations. However, HMRC has discretion (reg. 29) to accept alternative evidence.
VAT Regulations 1995, SI 1995/2518; Tower Bridge GP v HMRC
HMRC's discretion under reg. 29: Two-stage approach (first, whether a taxable supply exists; second, reasonableness of HMRC's decision regarding alternative evidence) is flawed. FtT's role is supervisory – examining reasonableness, not merits.
Scandico Ltd v HMRC, Tower Bridge GP v HMRC
Pleadings must clearly set out the case to avoid 'trial by ambush'. Amendments are possible, but must be timely.
Netbusters v HMRC, AllPay v HMRC, Shinelock Ltd v HMRC, Quah v Goldman Sachs International
Outcomes
HMRC's application to strike out the appeal was dismissed.
The appeal involves substantial issues and evidence requiring a full hearing, not a mini-trial. HMRC failed to demonstrate the appeal lacked reasonable prospects of success; the Appellant's case, while needing clarification, invoked the FtT's supervisory jurisdiction over HMRC's discretionary decision.
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