- In the case of Fount Construction Ltd v HMRC [2024] UKFTT 340 (TC), HMRC had disallowed claims for recovery of input tax on the basis that the corresponding invoices held by the Appellant didn’t meet the legislative requirements
- The denial amounted to three invoices from the same company with the VAT totalling £15,218.59 (“Contested Invoices”)
- The Contested Invoices each contained a description “Building Works at the above” and the invoices contained the job address for the building site in question
- HMRC’s decision was that the Contested Invoices didn’t meet the requirements of regulation 14 (1) paragraphs (g) and (h) of the VAT Regulation 1995;
(g) a description sufficient to identify the goods and services supplied
(h) for each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT, expressed in any currency - The First-tier Tax Tribunal (“FTT”) found that the purpose of the description on an invoice is 1) to enable the customer and supplier to have a common understanding of which services the invoice relates to and 2) to provide HMRC with a means of understanding the essential nature of supply and a means of identifying the supply in correspondence with the customer or supplier to seek more information as needed
- The FTT didn’t agree with HMRC that the invoice needs to be in such detail to enable HMRC to draw definitive views on the VAT treatment of the supply from the invoice alone stating “The invoice is a gateway into any enquiries by HMRC, rather than a repository to any questions that might be asked.”
- Therefore, the FTT found the short description utilised on the Contested Invoices in this case was sufficient to meet the requirements of Regulation 14 and the appeal was allowed
See the full case here.
Comment
We have seen HMRC raise VAT assessments for the same reasons as laid out in this case i.e. an insufficient description. It is important to try to defend any such allegations and/or supply alternative evidence to HMRC to demonstrate the supply took place and the input tax denial is valid before HMRC make a decision and you incur the cost of appealing to the FTT and attending a hearing.
*Information is taken from Aspire Business Partnership
