VIT63100 - Legal history: cases about evidence to claim input tax
Genius Holding BV 1991 STC 239
Terra Baubedarf-Handel GmbH 2005 STC 525
Zipvit Ltd v Revenue and Customs Commissioners - [2018] STC 1502
Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.
Genius Holding BV 1991 STC 239
The company regularly used sub-contractors to fulfil its orders. It tried to claim VAT charged to it by those sub-contractors.
The Court was asked to decide whether the right to deduct under Article 168 of the Principal VAT Directive meant VAT became deductible simply because it had been charged on an invoice. The Court held that the right to deduct was only extended to VAT which is actually due. The Court also held that the right does not extend to VAT which is shown on an invoice but which has been incorrectly charged.
Terra Baubedarf-Handel GmbH 2005 STC 525
The Court held that Article 18(2) of the Sixth Directive means the right to deduct must be exercised in the tax period in which two conditions are met. These conditions are that:
- the goods have been delivered or the services performed; and
- the taxable person holds the invoice or the document which may be considered to serve as an invoice.
Zipvit Ltd v Revenue and Customs Commissioners - [2018] STC 1502
Zipvit is a mail order supplier that had received postal services from the Royal Mail. At the time, these services were treated as exempt by both Royal Mail and by HMRC. In 2009 the CJEU decided that VAT should have been charged on some of postal services provided by Royal Mail to businesses.
Following the CJEU decision, Zipvit submitted a claim for VAT claiming that the VAT was “embedded” in the price it paid to Royal Mail although the services were treated as exempt at the time.
HMRC rejected this claim on the grounds that Zipvit had not paid VAT on these services and did not hold a valid VAT invoice.
The Court of Appeal held that the requirement for a VAT invoice that satisfies the legislative requirements is mandatory and in the absence of a VAT invoice showing that VAT was charged to Zipvit by Royal Mail, Zipvit could not recover any input tax (even if that input tax was ‘due and paid’). The Court also concluded that whilst HMRC has discretion to accept alternative evidence, in order to do this HMRC must be satisfied that the alternative evidence shows that the VAT to be claimed was duly accounted for by the supplier.