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HMRC internal manual

VAT Input Tax

Legal history: cases about evidence to claim input tax

Genius Holding BV 1991 STC 239
Terra Baubedarf-Handel GmbH 2005 STC 525

Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.

Genius Holding BV 1991 STC 239

The company regularly used sub-contractors to fulfil its orders. It tried to claim VAT charged to it by those sub-contractors.

The Court was asked to decide whether the right to deduct under Article 168 of the Principal VAT Directive meant VAT became deductible simply because it had been charged on an invoice. The Court held that the right to deduct was only extended to VAT which is actually due. The Court also held that the right does not extend to VAT which is shown on an invoice but which has been incorrectly charged.

Terra Baubedarf-Handel GmbH 2005 STC 525

The Court held that Article 18(2) of the Sixth Directive means the right to deduct must be exercised in the tax period in which two conditions are met. These conditions are that:

  • the goods have been delivered or the services performed; and
  • the taxable person holds the invoice or the document which may be considered to serve as an invoice.