Zipvit - Supreme Court ruling – HMRC Success

An example of how stamina can be required when challenging VAT interpretations through the courts can be found in this judgement where the issue was triggered in 2009 when the Zipvit business made two claims for Input VAT deduction on the costs from Royal Mail on postal charges. The belief as to the validity of the input tax claim by the tax payer, stemmed from an EU Court of Justice decision in that year, that individually negotiated business postal services contracts fell outside of the usual VAT Exemption that applies to postage.

Many other tax payers would have lodged claims that sat behind the Zipvit appeal and the VAT that HMRC would have been at risk of refunding was estimated to be in the region of £500m to £1bn – so quite a dent in the Treasury coffers if the case had been won by the tax payer.

The decision ended up supporting HMRC’s position and I’m sure there will be interest in the twists and turns of the interpretation of the VAT legislation which the case examined. One key aspect was whether the taxpayer had a right to work out a value of input tax out of the sums it had paid to Royal Mail on the basis that the monies it paid to them must have included an estimated element of VAT and then whether that could be refunded in the absence of invoices to show it had been charged and had paid VAT.

Thirteen years later we, and Zipvit have the answer – No - stamina indeed.

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