[2010] UKFTT 285 (TC)

TC00574
	Appeal number: TC/2009/13340

VAT – INPUT TAX – claims not supported by invoices or other documentary evidence – Appeal dismissed 

FIRST-TIER TRIBUNAL

TAX 

	ROBERT GARY EDGAR	Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS	Respondents

		TRIBUNAL: 	MICHAEL TILDESLEY OBE  (TRIBUNAL JUDGE)									

Sitting in public at North Shields on 18 June 2010

The Appellant appeared in person

Bernard Hayley advocate of the Solicitor’s office of HM Revenue & Customs, for HMRC

© CROWN COPYRIGHT 2010

DECISION

The Appeal
1.	The Appellant was appealing against HMRC’s decision on review dated 29 July 2009 refusing to give credit for input tax in the sum of ₤36,786.
2.	On 19 January 2009 the Appellant submitted a voluntary disclosure requesting repayment of VAT in the sum of ₤50,870 for the VAT periods 01/06 to 04/08.  The disclosure included an amount of ₤14,084 which related to VAT on bad debts. The Appellant, however, accepted that he was not entitled to bad debt relief because his returns had been prepared on a cash accounting basis. The balance of ₤36,786 concerned purported claims for input tax on purchases of small tools and petrol. HMRC rejected the purported claims because they were not supported by invoices or documentary evidence in the absence of invoices. The purported claims were based on a bank and cash reconciliation from sales invoices and bank statements prepared by the Appellant’s accountant which showed an unallocated cash balance. The Appellant assumed the unallocated cash balance related to purchases connected with his business, upon which input tax could be reclaimed.
3.	The Appellant blamed his previous accountant for not submitting accurate returns. He indicated on his Notice of Appeal that he could provide details of his expenditure which would constitute satisfactory alternative evidence to support his claims for repayment of VAT.  
4.	The Tribunal heard evidence from the Appellant and Mrs Mooney, the HMRC Officer who rejected the repayment claim. This decision incorporates the documentary evidence included in the bundle and Mrs Mooney’s witness statement.
The Decision
5.	The Appellant provided the Tribunal with copies of a new set of accounts for his business up to October 2007 which had been redone by his new accountants. He supplied the Tribunal with no other documentary evidence to support his repayment claims.
6.	Under section 25 of the VAT Act 1994 a taxable person is entitled at the end of each accounting period to credit for input tax paid on taxable supplies of goods or services made by a taxable person. Section 24(6) (a) of the 1994 Act enables Regulations to be made which provide for VAT to be treated as input tax only if and to the extent that the charge to VAT is evidenced and quantified by reference to such documents or other information as may be specified in the Regulations or the Commissioners may direct either generally or in particular cases or classes of cases. Regulation 29(2)(a) of the VAT Regulations 1995 requires a taxable person to hold a VAT invoice for the supply from another taxable person, in respect of which a claim for input tax is made. Regulation 14(1) of the 1995 Regulations specifies the contents of a VAT invoice. 
7.	Under Regulation 29(2) of the 1995 Regulations the Commissioners are given the power to require a taxable person to hold or provide such other evidence in support of a claim for input tax. The Commissioners have issued a Statement of Practice (SP 7/2003) effective from 16 April 2003, regarding the circumstances in which input tax recovery will be allowed in the absence of a valid VAT invoice. A taxpayer is required, in addition to providing alternative evidence, to be able to answer satisfactorily most (or, in the case of supplies involving specified goods, all or nearly all) of the following questions:
(1)	Is there alternative documentary evidence other than an invoice (eg supplier statement)?
(2)	Is there evidence of receipt of a taxable supply on which VAT has been charged?
(3)	Is there evidence of payment?
(4)	Is there evidence of how the goods/services have been consumed within the claimant’s business or their onward supply?
(5)	How did the claimant know that the supplier existed?
(6)	How was the claimant’s relationship with the supplier established?
8.	 The following conditions must, therefore, be met for input tax credit to be available:
(1)	A supply must have taken place;
(2)	the input tax credit must be claimed by the taxable person to whom the supply is made,
(3)	the supply must be chargeable to tax at the rate claimed;
(4)	the claimant must hold satisfactory evidence of his entitlement to input tax credit.
9.	The Tribunal finds that the re-done set of accounts did not constitute satisfactory evidence of the Appellant’s entitlement to input tax credit. The Appellant held no valid VAT invoices to support his repayment claim. The Tribunal, therefore, dismisses the Appeal.
10.	During the course of the hearing the Appellant requested an adjournment to obtain further documentary evidence. The Tribunal refused the adjournment because the hearing had been previously adjourned on 29 April 2010 at the Appellant’s request. Further the Appellant had failed to comply with two separate directions of  the Tribunal to produce a list of his documents by 7 January 2010 which was   extended to 5 February 2010.
11.	This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.   The application must be received by this Tribunal not later than 56 days after this decision is sent to that party.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

                                          

                                	     MICHAEL TILDESLEY OBE
 TRIBUNAL JUDGE
RELEASE DATE: 22 June 2010

MAN/