Not a sham

The taxpayer had claimed input VAT on two supplies of software by a third party. HMRC refused the claim on the grounds that they were shams. The VAT tribunal found for the taxpayer, so HMRC appealed.

The High Court said that it was for HMRC to show that the taxpayer knew that the relevant documentation did not reflect the underlying transaction. The tribunal had not erred in law in its approach, and nothing in its findings relating to the alleged misdescription of the goods could be characterised as irrational.

HMRC's appeal was dismissed.

Categories: Tax cases