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Heanor Motor Company Ltd (TC4163)
The taxpayer company ceased trading in 2010 as a result of accumulated losses.
It had paid rent on its premises to an associated company, which elected to waive the VAT exemption so that the rent was subject to VAT and the taxpayer was entitled to claim input tax on the sums.
HMRC disallowed the claim six months after it was made, on the basis the invoices had not been paid to the landlord (VATA 1994, s 26A).
The taxpayer appealed.
Much discussion at the First-tier Tribunal concerned whether payment had been made indirectly by internal journals or by year-end credits to different loan accounts.
The judge ruled that the evidence did not support the explanations and statements of the director. The company was not entitled to credit for the input tax.
The appeal was dismissed.
