Lack of self-billing invoices

Alternative evidence under VAT Regulations SI 1995/2518  reg 29(2)

A scrap metal company operated an informal self-billing system with suppliers for many years.

HMRC was aware of the arrangements but refused an input tax claim from the business regarding four suppliers that deregistered from VAT and raised an assessment. The taxpayer appealed saying HMRC had failed to exercise its discretion under VAT Regulations SI 1995/2518 reg 29(2) to allow alternative evidence in support of input tax deductions.

The First-tier Tribunal allowed the appeal but the Upper Tribunal (Tax and Chancery Chamber) overturned that decision and remitted it to the First-tier Tribunal for a rehearing. The taxpayer appealed. This was on the basis that the Upper Tribunal having concluded that HMRC had acted unreasonably in not having exercised its discretion to accept alternative evidence in support of input tax deductions should have concluded that the failure had...