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Buyer beware

19 July 2016 / Neil Warren
Issue: 4559 / Categories: Comment & Analysis

A tribunal case in which HMRC disallowed input tax on advance payments even though the supplier had issued tax invoices.


  • Input tax was disallowed because there was no supply.
  • Previous cases have supported the tribunal’s decision.
  • Fraud was not in point.
  • Possible claim on the basis the project was aborted.

Caveat emptor – these are the only words of Latin I remember from my days of studying economics at school. They mean: let the buyer beware. The English version of the phrase was quoted in a recent First-tier Tribunal decision  D & J Grant(TC5195) which provided some important lessons and unfortunately had a bad VAT outcome for the taxpayer.

The appeal concerned a farming business that ordered machinery from a UK supplier. It paid 70% of the cost of the equipment in advance of delivery (plus VAT) but the supplier went into liquidation before the goods arrived. Even...

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