Identity of Supplier and Input VAT Recovery

The recovery of input VAT incurred in relation to the purchase of a helicopter was the subject of a case heard by the First Tier Tribunal. The Appellant, Eastern Atlantic Helicopters (“EAH”), who trade in new and used helicopters internationally, purchased a US registered helicopter and received the corresponding purchase invoice from MP Helicopters Limited (“MP”) in the VAT period ending 12/13 and attempted to recover the input VAT incurred on this purchase. Prior to the sale, MP had changed the business name to VGEXSYS Ltd, however the invoice included the supplier name as MP Helicopters Limited, which did not exist at the time of issue therefore rendering the invoice invalid.

 

This recovery was blocked by HMRC due to the legal owner of the helicopter, AAA Flights Inc. (“AAA”), with whom the purchase agreement was made, not being registered for VAT meaning VAT was not chargeable on the supply. AAA are a trust whose sole beneficiary was Mr Marshal Parker, the director of MP.

 

EAH’s argument supporting input recovery was that AAA held the registration of the helicopter on a special purpose trust that allowed the helicopter to be subject to less arduous US aviation regulations whereas MPH were still the legal owners of the goods when the supply took place.  It was determined that due to MP being the beneficial owner of helicopter by way of the business previously accounting for import VAT and issuing the relevant sales invoice, MP were in fact the supplier of the helicopter and EAH were allowed to recover input VAT incurred in relation to the supply in principle.

 

HMRC’s initial refusal to grant input VAT recovery on the basis that an invalid supplier name was included on the invoice generated an appealable matter, to which the First-Tier Tribunal exercised discretion to facilitate the Appellants ability to recover incurred input VAT.

 

The recovery of input VAT in relation to more complex business agreements is not always cut and dried – make certain of your position prior to any transaction taking place by calling our free VAT helpline.

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