Self-billing problem

The taxpayer company was a scrap metal business that had used a self-billing system with suppliers for many years. HMRC were aware of the arrangements having carried VAT inspections at the firm but had not formally sanctioned them.

The company would ask for a copy of a supplier’s VAT registration certificate and then call the local VAT office to check the document was correct. The taxpayer made no further checks on the supplier.

It transpired that four of the suppliers had deregistered which led the Revenue to refuse to allow input tax claimed by the company in respect of supplies from the four traders.

The taxpayer appealed saying HMRC should use discretion permitted under VAT Regulations 1995 reg 29 to consider the claim. The department refused because the conditions for self-billing had not been met by the taxpayer.

The First-tier Tribunal said the taxman was...