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HMRC internal manual

VAT Fraud

Basic interventions: input tax interventions: supporting a claim to input tax: where the VAT invoice held is deemed to be invalid: where the invoice is deemed to be invalid - the Invalid Invoice and exercising HMRC’s discretion

Where the taxable person has provided evidence that he has been unable to obtain a valid VAT invoice (see VATF42424) HMRC has the discretion whether or not to allow recovery of the input tax and will consider alternative evidence that:

  • the supplier is VAT registered;
  • the supply as stated on the invoice did take place;
  • the supply is in furtherance of the taxable person’s business;
  • the taxable person has undertaken normal commercial checks to establish the bona fides of the supply and supplier;
  • normal commercial arrangements are in place, which can include payment arrangements and how the relationship between the supplier/buyer was established.

As the First Tier Tribunal found in the case of McAndrew Utilities Ltd (UKFTT 749 (TC)) at paragraph 122, the alternative evidence required is evidence to the same level of detail as that which would be contained in a valid invoice.

For guidance on what to do if you hold an invalid VAT invoice see para 16.8 VAT Notice 700: the VAT guide.

If you have any questions regarding the use of HMRC’s discretion where alternative evidence is held please contact the VAT Fraud Team.