VAT - clarity of the meaning of ‘due or paid’ in invoice

Zipvit sold vitamins and minerals by mail order and used Royal Mail to deliver them. Royal Mail did not charge VAT on the services because it believed these were exempt (Directive 2006/112/EC art 132(1)(a)). The decision of the Court of Justice of the EU in R (on the application of TNT Post UK Ltd) v CRC (Case C-357/07) [2009] STC 1438 determined that the Royal Mail’s services should have been standard rated. As a result Zipvit claimed input VAT on the basis that the price it paid for Royal Mail’s services should be treated as including VAT. HMRC rejected the claims.

The First-tier Tribunal Upper Tribunal and Court of Appeal dismissed Zipvit’s appeals.

In its appeal to the Supreme Court Zipvit said the commercial price it paid for Royal Mail’s services should be treated as including VAT and it was entitled to deduct that VAT because it...