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Y4 Express Ltd arranged for the importation of goods from companies based in China and Hong Kong.
It used Royal Mail’s printed postage impressions service but in 2013 Royal Mail suspended Y4’s access to the service because of concerns that it was not making accurate declarations. To circumvent this problem Y4 set up an account in the name of an individual (Mr Man) and another company (Colemead Ltd). Y4 prepared invoices to be issued by Mr Man and Colemead and claimed input VAT.
HMRC refused the claim and this was upheld by the First-tier Tribunal on the basis that neither Mr Man nor Colemead were making taxable supplies.
The taxpayer appealed.
The Upper Tribunal said Y4 could succeed in establishing it was making supplies for a consideration only if it could show there was a ‘legal relationship’ between it and Mr Man or Colemead under which Y4 would be paid. This...
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