V5.225 HMRC powers—powers to enforce compliance
HMRC has wide powers in order to carry out its duties in an efficient and economical manner. The below sets out the types of sanction available to HMRC when dealing with non-compliant taxpayers.
HMRC powers to enforce compliance—withholding repayments
HMRC may, as a condition of repaying any input tax to any person, request a copy of the evidence supporting the input tax claim (e.g. the VAT invoice). This is because for a taxable person to exercise their basic right to deduct input tax, they must hold a valid VAT invoice. The VAT invoice must comply with all the criteria set out in SI 1995/2518, reg 141. Thus, where assurance officers wish to verify a repayment claim, they may withhold repayment if the person declines to produce the required evidence. However, the ECJ has suggested that, in accordance with the principle of proportionality, a trader should be permitted to provide an alternative form of security, rather than simply being denied repayment2.
This discretion is provided
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