This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

VAT Fraud

What to consider prior to determining whether to use an intervention: applying VAT basics: other basic matters to consider: VAT shown on an invoice by the issuer of the invoice


If a tax invoice has been issued for a taxable supply, and that invoice shows an amount of VAT, then the person issuing the invoice must pay the declared output tax. This is regardless of whether the supply took place or not or whether the person issuing the invoice was a taxable person.

EU and UK law

EU law

Article 203 of Directive 2006/112 (‘the VAT Directive’) states:

VAT shall be payable by any person who enters the VAT on an invoice.

UK law

The VAT Act, Schedule 11, section 5 states:

(1) VAT due from any person shall be recoverable as a debt due to the Crown.

(2) Where an invoice shows a supply of goods or services as taking place with VAT chargeable on it, there shall be recoverable from the person who issued the invoice an amount equal to that which is shown on the invoice as VAT or, if VAT is not separately shown, to so much of the total amount shown as payable as is to be taken as representing VAT on the supply.

(3) Sub-paragraph (2) above applies whether or not—

(a) the invoice is a VAT invoice issued in pursuance of paragraph 2(1) above; or

(b) the supply shown on the invoice actually takes or has taken place, or the amount shown as VAT, or any amount of VAT, is or was chargeable on the supply; or

(c) the person issuing the invoice is a taxable person;

and any sum recoverable from a person under the sub-paragraph shall, if it is in any case VAT be recoverable as such and shall otherwise be recoverable as a debt due to the Crown.

Case law

Stroy trans EOOD (Case C-642/11)

In the case of Stroy trans the ECJ, in its judgment, found that Article 203 of the VAT Directive must be interpreted as meaning that the VAT entered by a person on an invoice is payable by him regardless of whether a taxable transaction actually took place.

It also found that the recipient of the invoice could reclaim the VAT as input tax, even though no taxable transaction took place, unless it could be established, on the basis of objective evidence, that he knew or should have known that the transaction was connected with fraudulent evasion of VAT (see VATF50000).