In Zipvit Ltd v HMRC the Upper Tribunal confirmed the First Tier Tribunal’s decision that Zipvit could not reclaim input VAT in respect of services received which were wrongly invoiced as exempt.

  • Zipvit received mail order services from Royal Mail (RM).
  • Both RM and HMRC wrongly thought the services were exempt from VAT: in fact they should have been standard rated.
  • RM did not issue VAT invoices to Zipvit; the invoices issued indicated that the supplies were exempt.

Zipvit argued that they should be allowed to reclaim input VAT on the basis that

  • RM should have charged VAT on the invoices.
  • HMRC should have assessed RM for the output VAT.
  • Once HMRC accept that a chargeable supply is made they should accept the right to deduct.
  • HMRC should use their discretion to accept alternative evidence of the right to deduct in the absence of VAT invoices.

The Upper Tribunal dismissed the appeal, finding that

  • HMRC was entitled to consider why no VAT invoice was held: in this case because the supply was treated as exempt.
  • Zipvit had not actually paid any VAT nor suffered any loss.
  • HMRC had no obligation to consider any other evidence of the charge to VAT.


Case reference: Zipvit Limited v HMRC [2016] UKUT 0294

Subscriber guide: What constitutes a valid VAT invoice?