London School of Accountancy and Management Limited v The Commissioners for HMRC
Decision date: 6 May 2022
Neutral citation: [2022] UKFTT 239 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
LSAM appealed HMRC's refusal to allow a VAT credit of £781,505.76 claimed in period 09/12, asserting entitlement under Article 90 PVD as implemented by Reg 38 and s80 VATA due to credit notes issued after insolvency. The Tribunal found the appellant's evidence unreliable, that no real-world reduction in taxable consideration had occurred, and dismissed the appeal.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
The Tribunal treated the operative ratio as that entitlement to reduction under Article 90/Reg 38 requires a real-world reduction in the taxable amount actually received by the supplier; procedural and evidential requirements in the domestic regime (Reg 38/Reg 24 and s80 VATA, including protection against unjust enrichment and timing rules) must be satisfied and cannot be met by merely issuing credit notes or relying on insolvency prospects.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal expressed views that credit notes issued long after the relevant accounting period and after HMRC's rejection cannot retrospectively validate a prior VAT return adjustment, and that insolvency or the prospect of being an unsecured creditor does not, by itself, amount to a reduction in taxable consideration—EU case-law focuses on economic/commercial reality.