FTT did not consider whole picture in VAT strikeout

In G B Fleet Hire Limited v HMRC [2021] UKUT0225, the Upper Tribunal (UT) allowed an appeal against a First Tier Tribunal (FTT) decision to strike out the taxpayers claim. The FTT had wrongly concluded the taxpayer had dropped its case that supplies were zero-rated.

• The underlying tax dispute concerned whether the supply of vehicles exported to Ireland and the Far East were zero-rated which would allow an input tax reclaim.
• The FTT struck out the case after considering that a letter sent by representatives of G B Fleet Hire Limited (GBFH) to HMRC abandoned its case that the supplies were zero-rated and that as a result, the appeal had no prospect of success.
• The taxpayer appealed against the strikeout to the Upper Tribunal contending its case was maintained.

The UT allowed the appeal finding that:

• The FTT erred in law and the decision to strike out the appeal was irrational.
• The extract of the letter on which the strikeout was based was contradictory:
  • Accepting that some items were not zero-rated, while
  • Maintaining that input tax could be claimed where, in the absence of a zero rating, no entitlement to reclaim would arise.
• The FTT did not consider that the letter as a whole made it clear the taxpayer maintained that it can reclaim input tax and did not consider whether any other mechanism was available for such a reclaim.
• There were also relevant documents, which the FTT failed to consider, which indicated the taxpayer had not dropped their position that the supplies were zero-rated.

Useful guides on this topic

Appeals: VAT
The process of making a VAT appeal largely follows that of direct taxes, however, there are some differences.
How do I appeal an HMRC decision?  How do I appeal a penalty?  How can I request a Statutory Review?

VAT Toolkit
This is our summary version of HMRC's output and input VAT toolkits, our version includes more detail, topics and planning points.

External links

G B Fleet Hire Limited v HMRC [2021] UKUT0225