In Saint-Gobain Building Distribution Limited v HMRC [2021] UKUT 75 the Upper Tribunal (UT) ruled that a historical bad debt relief claim could not be made due to lack of supporting evidence. There was no proof that relief had not already been claimed.

Saint-Gobain had brought other companies into its VAT Group.

HMRC rejected the claim which stood at £9.9 million arguing that BDR claims could have been made by the previous companies.

The First Tier Tribunal (FTT) dismissed Saint-Gobain’s appeal, on the basis that there was no evidence to show that previous claims for the periods had not been made. The FTT also commented that where building materials had been incorporated into various buildings, the retention of title clauses was rendered irrelevant.

The UT agreed with the FTT's conclusion that Saint-Gobain failed to prove on the balance of probabilities that BDR had not been claimed in the earlier VAT periods.

The appeal was dismissed.

Comment

This case further emphasises that where goods are incorporated into buildings, retention of title clauses are not always effective where legal title is transferred to customers. Adequate and robust evidence is essential in any Bad Debt Relief claim.

Useful guides on this topic   

Bad debts: VAT recovery
When can you recover VAT on a bad debt? How much VAT is payable to HMRC or recoverable from HMRC when only part of an invoice is paid? 

Reclaims and unjust enrichment
When can VAT reclaims be made? What are the time limits? What is unjust enrichment? Why might unjust enrichment prevent HMRC making VAT repayments? 

External links

UT: Saint-Gobain Building Distribution Limited v HMRC [2021] UKUT 75

FTT: Saint-Gobain Building Distribution Limited v HMRC [2019] TC07142


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