This case highlighted the importance of adequate record keeping and the maintenance of a clear audit trail to evidence all transactions, supplies and purchases. The appellant was refused a substantial VAT repayment because there was not sufficient evidence to support the VAT liability of the supplies concerned. It is important that all taxpayers maintain all records legally required for a minimum of 6 years to avoid any VAT assessments and penalties based on insufficient records. Similarly, if a taxpayer has declared VAT at an incorrect (higher) rate than is legally correct, it will be necessary to ensure that the reason for any VAT accounting error can be explained and demonstrated to HMRC’s satisfaction before any VAT refund claim is authorised.
Source Constable
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