The Supreme Court has refused permission to appeal the Court of Appeal’s judgment in Tower Bridge GP Ltd v HMRC  EWCA Civ 998. The company claimed a deduction for input VAT despite not having a valid invoice arguing that it was entitled to a deduction either as of right or because HMRC unlawfully exercised its discretion in refusing to allow the deduction.
The Supreme Court unanimously decided that the application did not raise an arguable point of law as:
- Member States may make the exercise of the right to deduct dependent on conditions relating to the content of invoices that are expressly laid down by the VAT directive. The Court could not see how an invoice, which lacks an essential component that cannot be otherwise supplied, could be relied on to exercise the right to deduct.
- The primary means by which a taxable person may exercise the right to deduction is by possession of a valid VAT invoice. While HMRC have discretion in this regard, if an exception were to be made, there would be a loss to the public purse. There had been a failure to carry out “the most basic of checks”. These were perfectly legitimate matters for HMRC to take into account in deciding whether to exercise discretion.