VAT Invoices & Alternative Evidence

One of the more popular questions we hear is about whether you can recover VAT without what appears to be a valid invoice – and what is meant by “alternative evidence” in this regard.  This was considered by the First-tier Tribunal (FTT) who sided in favour of the business.

Athena Luxe Ltd is a retailer that buys luxury goods – including from Harrods and Louis Vuitton – and exports them, mainly to Hong Kong. They claimed input VAT on these purchases, but HMRC challenged their claims for three VAT periods in 2023. The crux of the dispute was whether Athena had the right paperwork: specifically, valid VAT invoices as required by the VAT Regulations.

For the Harrods purchases, Athena had invoices in its own name, but HMRC argued these didn’t describe the goods in enough detail. For the Louis Vuitton purchases, the invoices were in the names of Athena’s employees, not the company itself, which HMRC said made them invalid.

The law says you need a valid VAT invoice to recover input tax, but there’s a bit of flexibility. HMRC can accept alternative evidence if a valid invoice isn’t available, as long as it’s clear the purchase was for the business and paid for by the business.

The Tribunal took a practical approach. For the Harrods invoices, they said that when you look at the invoice together with the till receipt, there’s enough information to identify what was bought. That’s all the law really requires – the invoice doesn’t have to spell out every detail, just enough to identify the supply.

The Louis Vuitton situation was trickier. The invoices weren’t in Athena’s name, but Athena had tried to get proper invoices and could show, with bank statements and correspondence, that the goods were bought for the business and paid from the business account. The Tribunal said HMRC was being unreasonable by refusing to accept this alternative evidence, especially since they’d accepted similar evidence for other suppliers.

In the end, Athena won. The Tribunal allowed input tax recovery for both Harrods and Louis Vuitton purchases – on the basis of valid invoices for Harrods, and alternative evidence for Louis Vuitton.

This case is helpful!  If you’re missing a formal VAT invoice but have other solid evidence that a purchase was for your business and paid by your business, HMRC should consider that evidence. And, the level of detail required on a VAT invoice isn’t as high as HMRC sometimes claims. It is worth noting however that where you don’t have a valid invoice, you should at least try to get this rectified and retain the evidence of these steps.