Judgment summary
The Tribunal heard an appeal by Plat UK Limited, a VAT registered company selling luxury goods such as designer handbags to consumers in South Korea, against a decision of HMRC dated 7 August 2024, upheld on review, assessing the Appellant for VAT across periods 11/20 to 08/23 in the cumulative amount of £470,894 (paragraph 2).
The assessments were made on the basis that the Appellant did not hold valid invoices for input supplies over £250 in value and that HMRC was not satisfied, on the basis of alternative evidence, that the input tax claims should be allowed (paragraph 2).
The appeal proceeded on two grounds: the Valid Invoice Ground, that the Appellant did in fact hold valid invoices, and the Discretion Ground, that HMRC's exercise of its discretion under regulation 29(2) of the Value Added Tax Regulations 1995 to refuse to accept alternative evidence was unreasonable (paragraph 3). The Tribunal dismissed the appeal on both grounds (paragraph 4).
Background
The Appellant sourced luxury goods mostly from Harrods, and otherwise from designer retailers such as Louis Vuitton and Dior, for resale to consumers in South Korea (paragraph 1). HMRC opened a VAT verification on 29 August 2023 into the Appellant's 05/23 VAT return, in which a repayment of £79,903.48 was claimed (paragraph 20).
The Appellant's then representative confirmed that no VAT invoices were obtained for purchases, and that the business had operated similarly across previous VAT periods (paragraph 21). Documents provided included till receipts and 'client receipts' from Dior and Harrods made out to individuals other than the Appellant, an undated Selfridges receipt, a Louis Vuitton invoice made out to a Ms Kim, and invoices from Global Shipping Master UK Ltd (GSM) for services including 'Buying' (paragraph 22).
Officer Carey issued a pre-decision letter on 24 November 2023 and Notices of Assessment on 20 December 2023 (the Initial Decision), which was later cancelled on review on 10 July 2024 because it had not been demonstrated that the reg 29(2) discretion had been considered (paragraphs 25-30). The Appellant's new representative, Mr Cho, subsequently submitted a substantial number of Harrods invoices issued in January 2024 in respect of transactions from June to August 2023 (the Harrods Invoices), which were resent to HMRC on 24 or 25 July 2024 (paragraphs 28-32).
On 7 August 2024, Officer Carey issued the Decision under appeal, assessing VAT for periods 11/20 to 08/23 in the amount of £470,894, concluding that the Harrods Invoices and other documentation were not compliant VAT invoices and declining to exercise the reg 29(2) discretion to accept alternative evidence (paragraphs 33-39). The Decision was upheld on review on 17 January 2025 (paragraph 46).
Core dispute
The first issue was whether the Appellant held valid VAT invoices, in particular whether the Harrods Invoices, which lacked a sufficient description of the goods, could nonetheless satisfy regulation 14 of the Value Added Tax Regulations 1995 when read together with corresponding till receipts, relying on the Tribunal decision in Athena Luxe v HMRC [2025] UKFTT 01507 (TC) (paragraphs 54-57).
The second issue was whether HMRC's exercise of its discretion under regulation 29(2) to refuse to accept alternative evidence in place of a valid invoice was reasonable, the Appellant contending that Officer Carey misunderstood the nature of the discretion, ignored the Harrods Invoices, acted without further dialogue with the Appellant's new representative, and failed to invite the Appellant to provide corresponding till receipts (paragraph 67).
There was no separate challenge to the quantification of the Assessments, though the Appellant raised, only on the final day of the hearing, an argument that it was unreasonable for HMRC to extrapolate findings from 2023 evidence back to periods from 11/20 (paragraph 51).
Court findings
The Tribunal found that the Harrods Invoices were not compliant VAT invoices because they lacked a description sufficient to identify the goods under regulation 14(1)(g), a conclusion Mr Cho conceded (paragraphs 54, 59). The Selfridges Invoices, not provided to HMRC before the Decision, shared the same deficiency and could not in any event found a challenge to the Decision (paragraph 59). The only compliant invoice, the Kim Louis Vuitton invoice, was not made out to the Appellant (paragraph 59).
The Tribunal rejected the argument that the Harrods Invoices together with till receipts constituted a valid invoice. First, the Appellant did not hold the Harrods Invoices at the time of claiming the input tax deduction, as required by regulation 29(1) and (2) (paragraph 61). Second, the Tribunal respectfully departed from Athena Luxe v HMRC [2025] UKFTT 01507 (TC), holding that a purported invoice and a till receipt cannot together constitute a single composite VAT invoice under regulation 14 (paragraphs 65-66). Third, the Appellant had not in fact provided paired Harrods Invoices and till receipts to HMRC before the Decision (paragraph 66).
On the Discretion Ground, the Tribunal found that Officer Carey's Decision was one a reasonable body of Commissioners could have reached, given concerns that goods were not being supplied by Harrods (or other retailers) directly to the Appellant, evidenced by purchases made by individuals other than the Appellant's director, use of personal Harrods Rewards cards, and the Appellant's own acceptance that Harrods was unaware it was selling for resale (paragraphs 69-71). The Tribunal rejected each of the Appellant's four specific procedural fairness complaints, finding that Officer Carey had correctly approached the reg 29(2) discretion, had reviewed the Harrods Invoices, was not obliged to engage in further dialogue before the Decision, and was not obliged to invite further till receipts (paragraphs 72-76).
The Tribunal also held that the Appellant should not be permitted to raise the extrapolation argument so late in the hearing, but in any event found it unmeritorious, given the Appellant's own evidence that its business operated similarly across the relevant periods (paragraphs 51-53).
Outcome
The appeal was dismissed on both the Valid Invoice Ground and the Discretion Ground (paragraph 77). The Assessments totalling £470,894 for VAT periods 11/20 to 08/23 were upheld.
Major issues / areas of contention
- Whether the Harrods documents (the Harrods Invoices) constituted valid VAT invoices under regulation 14 of the Value Added Tax Regulations 1995.
- Whether a purported Harrods invoice, when combined with a corresponding till receipt, could together constitute a single valid VAT invoice, and whether Athena Luxe v HMRC [2025] UKFTT 01507 (TC) should be followed.
- Whether the Appellant held a valid VAT invoice at the time of claiming the input tax deduction, as required by regulation 29(1) and (2).
- Whether HMRC's exercise of the regulation 29(2) discretion to refuse to accept alternative evidence in place of a valid invoice was reasonable.
- Whether Officer Carey's Decision was procedurally unfair, including for proceeding without further dialogue with the Appellant's new representative and without inviting corresponding till receipts.
- Whether it was reasonable for HMRC to extrapolate findings from a sample of 2023 evidence to earlier VAT periods back to 11/20.