H Ripley & Co Limited v The Commissioners for HMRC

For intra-Community VAT zero-rating, the decisive question is whether the supplier held sufficient commercial evidence of removal within the prescribed period. It is not whether the goods were in fact removed. VAT Notice 725 validly required evidence to be obtained and retained within three months. Evidence obtained later may permit an accounting adjustment in a later period, but cannot retrospectively zero-rate the original supply.

The sufficiency of documentary evidence is an evaluative question for the fact-finding tribunal. A coherent trading pattern, incomplete transport documents and payment by a foreign customer do not compel a finding that the evidence was sufficient for each supply. The Notice's evidential and time requirements were proportionate and did not infringe EU-law principles.

The Appellant supplied scrap metal to a Belgian VAT-registered trader in 72 transactions during 2016. It treated the supplies as zero-rated intra-Community movements. HMRC denied the zero-rating because the Appellant did not hold sufficient evidence of removal from the United Kingdom within the period required by VAT Notice 725.

The First-tier Tribunal dismissed the Appellant's appeal in H Ripley & Co Limited v HMRC [2024] UKFTT 125 (TC). It found that the invoices, bank records, weighbridge tickets, CMRs, waste-shipment documents, boarding cards and communications did not, separately or together, establish removal in accordance with the Notice.

The Appellant appealed on six grounds. Its principal contentions were that the FTT had reached an unreasonable conclusion, applied an erroneous evidential standard, wrongly excluded late evidence, failed to apply EU law, overlooked a common commercial system, and was impaired by delay.

1. Appeal dismissed. The FTT made no error of law in holding that the Appellant was not entitled to zero-rate the 72 supplies.

2. The correct issue was whether the Appellant held sufficient evidence of removal within the requirements and time limits of VAT Notice 725, not whether the goods were in fact removed. In the absence of fraud or bad faith, adequate evidence held in time protects a trader even if a removal later proves not to have occurred. Conversely, actual removal does not cure a failure to obtain the required evidence in time.

3. The FTT's assessment of the sufficiency of the documents was an evaluative finding of fact. It was entitled to find that payments from a Belgian bank account, Belgian sales invoices, incomplete CMRs, weighbridge tickets, unsigned Annex VII documents, and communications did not identify the ultimate consignee or destination. It was also entitled to find that the P&O boarding cards could not reliably be matched to the disputed loads. The FTT had considered the documents cumulatively, and the evidence did not compel the contrary conclusion.

4. The FTT had not rejected unchallenged evidence. It accepted the documents for what they were and found them insufficient to discharge the Appellant's burden. The Supreme Court decision in Griffiths v TUI UK Ltd [2023] UKSC 48 therefore did not require HMRC to call evidence or cross-examine witnesses. Nor had the evidential burden shifted on the facts found.

5. Paragraphs 4.3 and 4.4 of VAT Notice 725 required the trader to obtain and retain valid commercial evidence within three months. Later evidence could support an adjustment in a later VAT period, but could not retrospectively zero-rate the original supplies. The Notice's requirements were proportionate: they permitted flexible commercial evidence, allowed time to obtain it, and moderated the consequence of late evidence by allowing a later adjustment.

6. A common pattern of dealings was at most relevant evidence. It did not relieve the Appellant of showing sufficient evidence of removal for each transaction. Although the FTT's delay in issuing its decision was regrettable, it did not impair its documentary assessment or disclose an error of law.

• Upper Tribunal (Tax and Chancery Chamber): dismissed the Appellant's appeal and upheld the denial of zero-rating.
• First-tier Tribunal (Tax Chamber): dismissed the Appellant's appeal against HMRC's denial of zero-rating: H Ripley & Co Limited v HMRC [2024] UKFTT 125 (TC).