The First-tier Tribunal (FTT) recently issued its judgement in Eurocent (Buckingham) Limited v HMRC [2025] UKFTT 09666 (TC): finding in favour of Eurocent, who were represented by BKL. This complex case, involving the recovery of input tax and the interpretation of UK VAT regulations, reaffirms an important principle for VAT-registered businesses.
About the case
The case centred on HMRC’s decision to deny Eurocent’s input tax recovery of around £50,000 in relation to fees from two suppliers, BHNV Development Ltd and Colridge Ltd, incurred during the purchase of a parade of retail units in Buckingham.
HMRC argued that the invoices issued to Eurocent were invalid. HMRC chose not to exercise their discretion to allow ‘alternative evidence’ and so denied input tax recovery under Regulation 29(2) of the VAT Regulations 1995.
BKL VAT consultant Simon Levine, acting for the Appellant, argued that the input tax should be allowed where there were valid VAT invoices from suppliers, while also questioning the scope of HMRC’s powers under Regulation 29(2).
The FTT’s findings
The FTT found in favour of the taxpayer on the central point of law. It confirmed that:
- The BHNV invoice met the statutory requirements of Regulation 14(1) — including sufficient detail to identify the services supplied — and therefore the invoice was valid and the associated VAT was recoverable
- HMRC were not entitled to deny input tax recovery under Regulation 29(2) where valid VAT invoices exist that comply with Regulation 14(1)
In other words, where a taxpayer holds a valid VAT invoice, HMRC cannot rely on Regulation 29(2) which deals with alternative evidence to reject an input tax claim on broader grounds. The discretion under Regulation 29(2) applies only when a trader does not hold a valid VAT invoice.
Although the Colridge invoice was found not to comply with Regulation 14(1), the FTT agreed that HMRC’s discretion under Regulation 29(2) was reasonably exercised in that respect. Overall, the appeal was allowed in part, with Eurocent’s main input tax recovery successfully upheld.
Why the judgement in Eurocent matters
The judgement provides welcome clarity on the limits of HMRC’s discretion and emphasises the importance of invoice compliance with Regulation 14(1) — ensuring that invoices contain the required details, such as: name and address of supplier and customer; supplier’s VAT number; details description of the services being supplied; VAT rate; amount.
For VAT-registered businesses, the case reaffirms that if the business holds valid VAT invoices, HMRC cannot deny input tax recovery under Regulation 29(2) by questioning the underlying transaction – unless HMRC state that these underlying concerns are an additional specific reason that the input tax is not reclaimable, even if a valid VAT invoice is held.
The decision is also useful for advisers dealing with HMRC challenges where procedural discretion is used to deny legitimate input tax claims.
How BKL can help
Our specialist VAT team are experienced in resolving VAT disputes with HMRC, including those involving input tax recovery, invoice validity, VAT grouping, property transactions and Regulation 29(2) discretion. As well as FTT representation, we have represented clients in Alternative Dispute Resolution and direct negotiations with HMRC.
For more information about the VAT input claim rules, and specialist guidance on VAT compliance for your business, get in touch with Simon Levine or Luigi Lungarella, or send us an enquiry.
