VAT case update: claiming VAT without invoices

A recent tax tribunal decision highlights the importance of keeping proper VAT invoices when reclaiming VAT on business purchases.

In the case of Mochars Ltd, the Tribunal considered whether a business could recover input VAT where it was unable to provide the required invoices to support its claim.

The Tribunal ultimately dismissed the appeal and confirmed that HMRC was entitled to refuse the VAT repayment.

Background to the case

The company was VAT registered and submitted a VAT return claiming input VAT on a number of purchases.

HMRC opened an enquiry and asked the business to provide supporting documents, including VAT invoices, bank statements and an audit trail for the purchases.

Although the company provided a list of transactions and later supplied some invoices, a number of purchases still had no supporting invoices or other clear evidence.

HMRC therefore refused the input VAT claims relating to those transactions.

Tribunal decision

The Tribunal agreed with HMRC’s decision.

Under VAT rules, businesses normally need a valid VAT invoice to reclaim input VAT. While HMRC does have the power to accept other types of evidence in certain situations, this is not automatic.

In this case the Tribunal found that HMRC had asked for supporting evidence several times over a number of months, including bank statements and other records, but this information was not provided.

Because there was not enough evidence to support the purchases, HMRC was entitled to refuse the claim for the remaining transactions.

HMRC does not have to suggest alternative evidence

The business also argued that HMRC should have told them what other evidence might be acceptable if invoices were missing.

However, the Tribunal rejected this argument.

It found that HMRC is not required to guide taxpayers on what alternative documents they could provide. The responsibility remains with the business to keep sufficient records to support any VAT being reclaimed.

What this means for businesses

This case is a reminder that VAT invoices remain the most important evidence when reclaiming input VAT.

If a business cannot produce invoices, it may still be possible in some circumstances to rely on other evidence, such as payment records or contracts. However, HMRC is not obliged to accept this and will expect clear proof that the purchases were genuine.

Businesses should make sure they keep proper VAT invoices and supporting records for all purchases where VAT is being reclaimed.

If invoices are missing, it is important to contact suppliers as soon as possible to obtain copies, as it may be difficult to recover the VAT without them.