In Zipvit Limited v HMRC [2022] UKSC12, the Supreme Court issued a second judgement dismissing the appellant's appeal to reclaim input VAT on services where the supplier, Royal Mail, had incorrectly not charged VAT. The judgement was made after the case had been referred to the Court of Justice of the European Union (CJEU).

  • Zipvit Limited (Zipvit) used a bespoke mailing service provided by Royal Mail.
  • At the time, all parties, including HMRC, believed that the service was exempt from VAT under the European VAT Directive.
  • A later CJEU case, R (TNT Post UK Ltd) v HMRC, found that services should have been standard rated for VAT.
  • Zipvit argued that VAT should have been charged in relation to the services received and that the price paid included VAT. With this in mind, Zipvit reclaimed the VAT worth £415,746.
  • HMRC denied the claim and Zipvit appealed.
  • Zipvit's appeals were dismissed at each stage until the Supreme Court referred the matter to the CJEU for clarification on the application of the VAT Directive.
  • The CJEU ruled on the following:
    • Whether Zipvit was entitled to reclaim input VAT on the basis that it had been 'due or paid' as the Royal Mail invoices had to be treated as containing notional VAT. The invoices did not contain an amount of VAT and so no VAT was paid. There could be no claim of input VAT.
    • If the claim could be made in principle, did Zipvit require a VAT invoice in order to make the claim; the CJEU did not find it necessary to answer this point as there was no initial right in principle to make the claim.
  • Zipvit also argued that HMRC had discretion under UK law over whether to accept notional VAT had been paid and a repayment of input VAT should be made.

The Supreme Court accepted the CJEU ruling on whether VAT had been paid. In relation to the matter of discretion, the First Tier Tribunal found that HMRC had not considered whether or not to apply discretion. However, it held that had the matter been considered, HMRC would have decided not to accept the claim.

The appeal was dismissed.

This was a test case for claims where the same mistake was made by Royal Mail. The claims for input VAT being made against HMRC are estimated to be between £500 million and £1 billion.

Useful guides on this topic

No input recovery as VAT was not due or paid
In Zipvit Ltd v HMRC (Case C-156/20) (13 January 2022), the CJEU found that VAT was not due or paid on Mailmedia services supplied by Royal Mail. This blocked Zipvit Ltd from recovering input VAT on the supplies.

What constitutes a valid VAT invoice?
What needs to be included on a VAT invoice? Can you claim back VAT without an invoice? What evidence do you need to claim input VAT? A valid VAT invoice is required to reclaim input VAT. HMRC have the discretion to allow defective invoices. 

Reclaims and unjust enrichment
When can VAT reclaims be made? What are the time limits? What is unjust enrichment? Why might unjust enrichment prevent HMRC making VAT repayments? 

External link

Zipvit Limited v HMRC [2022] UKSC12


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