HMRC internal manual

VAT Fraud

VATF42100 - Basic interventions: input tax interventions: introduction

Before any VAT can be deducted as input tax the following criteria must all be met:

  • the amount to be claimed must actually be VAT properly charged by another taxable person or relate to a taxable importation or acquisition;
  • supplies on which the tax was charged must be made to the person seeking to claim the input tax;
  • the specific supplies must have been incurred for the purpose of the business;
  • the supplies must normally be received in the accounting period in which the claim is to be made;
  • the person seeking to claim input tax must hold satisfactory documentary evidence of the supplies in support of his/her claim; and
  • supplies received must not be subject to input tax restriction in the form of a Treasury ‘blocking order’.

There are many reasons why a claim to input tax can be denied, such as:

  • no taxable supply (VATF42200);
  • supplies on which the tax was charged was not made to the person seeking to claim the input tax (VATF42300);
  • insufficient evidence to support the claim (VATF42430);
  • the invoice is invalid (VATF42420);
  • the supplies have not been paid for (VATF42500);
  • the input tax was incurred by a taxable person who has relied on his right to deduct for fraudulent ends (VATF42600).

The above list is not exhaustive.

The Input Tax guidance manual provides guidance on what can be treated as input tax and when that tax can be properly claimed.