Intention to make taxable supplies

The taxpayer registered for VAT in October 2018 with the registration backdated to June 2016. HMRC disputed a repayment return of £28 221 for September 2019 on the basis that the taxpayer had failed to prove that its input tax claims related to actual or intended taxable supplies. About 70% of the input tax disallowed by HMRC related to a supplier Caihma Construction Ltd (CC) which was dissolved in September 2019 having never submitted either construction industry scheme or VAT returns to HMRC.

There was no allegation that the taxpayer and CC were involved in any VAT fraud; the officer instead claimed the taxpayer had failed to provide evidence of making taxable supplies during this period and input tax was therefore blocked (VATA 1994 s 26(1)).

The taxpayer appealed.

The taxpayer provided the First-tier Tribunal with details of four different projects where it received construction services...