ZipVit VAT case – Appeal decision

Unfortunately, the Court of Appeal has held in favour of HMRC in a case involving a claim of input tax where the supplier (Royal Mail in this case) had incorrectly omitted to charge VAT.  This is the test case: Zipvit, and it is thought that several charity claims are reliant on it.

The decisive point for the Court of Appeal was that the lack of a VAT invoice is fatal to the claim, which is disappointing, since HMRC usually accepts a duty to consider alternative evidence.  However, the second argument on Zipvit’s behalf also ran into trouble when, on the Court’s instructions, documentary evidence was produced which appeared to make clear that Zipvit did not bear a VAT cost since the contract had explicitly allowed Royal Mail to add it to the stated charges as necessary.  This greatly weakens the case for any further appeal, since the case is now revealed not to have helpful facts on which a general principle could be established. This, coupled with having lost all three judgments in a row, must make a prediction of ultimate failure more likely.