VIT12200 | VAT Input Tax basics: unusual circumstances

Claims for input tax in the absence of a VAT invoice

HMRC staff should give the taxpayer every chance to produce evidence to support their claim to input tax. Normally a business can ask its supplier for a VAT invoice when one is not available right away. Sometimes this may not be possible, for example if the supplier is missing. HMRC staff should balance the need to protect the revenue against the need to ensure that businesses pay no more tax than is properly due from them.

In addition, a taxpayer may not be able to support a claim with a VAT invoice because it’s missing or lost or destroyed due to some unforeseen event such as theft of the records or a fire at the place of primary business. HMRC will consider alternative evidence to support the deduction - see VIT31200 on How to treat input tax: alternative evidence for claiming input tax.

Claims for input tax where the invoice issued is not a VAT invoice (as defined under Regulation 14)

Where claims to deduct VAT are not supported by a VAT invoice as defined under Regulation 14, HMRC staff will consider whether or not there is satisfactory alternative evidence to support input tax deduction in relation to expenses incurred in making taxable supplies. See VIT31200 on How to treat input tax: alternative evidence for claiming input tax.

Claims for input tax where the supply of goods was made for no consideration and was for the purpose of the recipient

If you make a gift of goods on which VAT is due, to someone who uses the goods for business purposes, that person can, if they are VAT registered, recover the VAT as input tax, subject to the normal rules. You cannot issue a VAT invoice, but in order to provide the recipient with acceptable evidence to support a claim for recovery of input tax, you may use your normal invoicing documentation and include the following statement:

‘Tax Certificate - No payment is necessary for these goods. Output tax of £xx.xx (insert amount) has been accounted for on the supply.’

Claims for input tax where trader deals in “goods subject to widespread fraud”

Some businesses operate in a trade sector that is subject to widespread fraud. When they do, the conditions listed in the basic right to deduct principles (see VIT12100) have to be met. They should take reasonable commercial steps to ensure their supplier and the relevant supply is genuine.

Claims for input tax where the recipient of a supply has been charged a sum purporting to be VAT by a non-authorised person

Sometimes an invoice wrongly represents a sum of money as VAT. When this happens the recipient of the supply cannot treat that amount as input tax. Special arrangements apply instead. These are set out in Extra Statutory Concession 3.9 (GOV.UK).