TSI Instruments Limited v The Commissioners for HMRC
Decision date: 29 October 2025
Neutral citation: [2025] UKFTT 1278 (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
TSI Instruments Ltd imported customers' goods into the UK for repair, paid import VAT and claimed it as input tax although it never became owner of the goods. The Tribunal held that, under Article 168(e) PVD and domestic VATA read consistently, the right to deduct import VAT requires that the cost/value of the imported goods be reflected in the taxpayer's taxable outputs (or that the importer effectively has the goods as owner). TSI's claims were rejected because it did not own the goods and the value of the goods was not incorporated into TSI's repair charges. The appeal was dismissed except that assessments were reduced to the parties' agreed figure of £8,432,896.86.
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: high
The Tribunal's ratio is that import VAT is deductible only where the importer uses the imported goods for taxable transactions in a way that directly and immediately links the cost/value of those goods to the taxable outputs — typically because the importer is owner or the goods' value is incorporated into the price of specific supplies. References in CJEU authority to "import costs" must, in context, be understood as referring to the cost/value of the goods subject to import VAT.
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 observed (obiter) that bearing incidental import-related charges such as customs formalities or small handling fees is unlikely, by itself, to satisfy the direct-and-immediate link required for deduction; and that s.27 VATA (repayments where goods imported for private purposes) does not clearly displace the EU-derived test nor prevent interpreting s.24 VATA in line with Article 168 PVD.