In Premspec Group Ltd v HMRC [2019] TC01374, there was no disallowance of unpaid input VAT under the six-month rule for invoiced supplies between related companies. The relevant consideration was found to be payable later than the date of supply.

  • A couple of companies in a group financed another group member by extending invoice credit for intra-group supplies. 
  • HMRC disallowed the input tax credit under s.26A VATA 1994 on the basis that some invoices remained unpaid six months after the invoice date.
  • The company appealed to the First Tier Tribunal (FTT).

The FTT noted that 'the relevant date', in relation to any sum representing consideration for a supply under s.26A is:

(a) the date of the supply or

(b) if later, the date on which the sum became the payable 'relevant date'.

The company successfully argued that the other group companies' credit terms for the invoices were ten years. 

The FTT found that this meant that the 'relevant date' under s.26A for input tax relating to supplies where the consideration remained unpaid had not been reached when HMRC raised its assessments and the appeal was allowed.


It is not uncommon for associated companies to be caught out by the six-month rule. It is less common to give an associate credit for ten years when you could simply make a cash loan. No one loses out, as the judge noted, the companies making the supplies had not claimed bad debt relief and so there was no mismatch between output VAT paid and input VAT reclaimed.


VAT Toolkit
Don't get caught out by the six-month rule, a toolkit of useful tips and planning points.

VAT appeals
What you can appeal and how to make one.

External links

Premspec Group Ltd v HMRC [2019] TC01374