Can you claim input tax without a VAT invoice?

Contact the supplier

Our client could not contact the supplier for a copy of the original purchase invoice because the company is now in liquidation and has vacated its trading premises. However, all is not lost: HMRC has the discretion to accept alternative evidence to support an input tax claim in the absence of a tax invoice.

Its published guidance is clear that officers must fully review any documentation that is given to them: “HMRC staff will not simply refuse a claim without giving reasonable consideration to such evidence.”

If an officer is reluctant to consider any evidence, our subscriber should refer them to Regulation 29 of the Value Added Tax Regulations 1995.

Format of evidence

Our client confirmed that the total payment made through their business bank account for this machine was £28,800. This indicates that the deal was for £24,000 plus 20% VAT of £4,800, i.e. a round sum amount with VAT charged on top. Issues considered by HMRC in accordance with its Invalid Invoice Statement of Practice include the following:

• Is there alternative documentary evidence of the supply, e.g. a supplier statement?
• Is there evidence that the goods or services were subject to VAT, used for business purposes and supplied by a VAT registered business, e.g. correspondence, delivery notes, order documents, past invoices received from the same supplier?
• In the case of goods (and some services), is there evidence of an onward supply, e.g. goods purchased for resale?
• Is there evidence of payment being made for the goods or services?
• How was the relationship established with the supplier?
• Has the claimant taken all possible measures to contact the supplier and get a tax invoice?

Our client can also provide photographs of the machine to the officer which will clearly show the details of the manufacturer. They could also provide an online link to show the current purchase price of the machine on the website of a UK distributor, assuming it is still in production.

HMRC will be cautious about allowing input tax claims on what it considers to be “high risk” goods, i.e. where missing trader fraud has been identified as a revenue risk, e.g. computers chips, IT equipment, mobile phones.

Right of appeal

As explained above, HMRC officers must review the evidence provided by our subscriber. However, it also has a duty to protect the public revenue, to ensure that input tax is not claimed in situations where output tax has not been declared by the supplier. The format of the evidence is not specified in law so officers should be flexible. To quote from VAT Manual VIT31200: “In exercising discretion to accept alternative evidence, HMRC must be satisfied that the alternative evidence shows that the VAT to be claimed was due and charged by the supplier and paid by the claimant.”

If an officer is unreasonable, our client should ask for a review by a different officer. Although officers must protect the tax yield, they are also obliged to ensure that taxpayers only pay the correct amount of VAT that is due.