Inadequate evidence to support input tax claim

HMRC issued an assessment disallowing input tax claimed by the taxpayer for periods September 2017 to March 2018. This was on the basis that there was no proper evidence available to support the claim as well as no evidence to confirm that any supplies of goods or services had taken place. Most of the input tax disallowed related to cash payments supposedly made to one particular supplier (T) with one invoice also disallowed for a separate supplier (G).

The relevant legislation in VATA 1994 s 24 to s 26 supported by Regulation 29 of the 1995 VAT Regulations specifies that evidence must be retained by a claimant including a tax invoice as per reg 13. In the absence of satisfactory evidence HMRC has the power to disallow input tax by issuing a ‘best judgment’ assessment in (VATA 1994 s 73(1)).

The...