Oriental Bu Trading Limited v The Commissioners for HMRC

This decision relates to two appeals by the Appellant, Oriental Bu Trading Limited (“OBT”), against decisions of the Respondents, His Majesty’s Revenue and Customs (“HMRC”), in relation to value added tax (“VAT”).

Both appeals concerned input VAT on purchases by OBT of luxury goods such as high-value clothes and watches from certain suppliers in the UK for export primarily to China. The underlying reason for the denial of input tax credit and the assessments was the same for both appeals. In summary, it was that OBT did not hold a valid VAT invoice or satisfactory alternative evidence of the payment of VAT on the purchase of certain high-value watches.

The hearing of the appeals took place over three days from 1 October 2025 to 3 October 2025. On 1 October 2025, the Tribunal heard opening submissions from Mr Firth KC and Mr Blades on behalf of OBT and evidence from several witnesses for OBT who were cross-examined for HMRC by Mr Matthews. On 2 October 2025, the Tribunal completed the hearing of evidence from the Appellant’s witnesses and then heard evidence from the HMRC officer responsible for the decisions to which we have referred above, Officer Neil Bamford. Officer Bamford was then cross-examined by Mr Firth KC on behalf of OBT.

That cross-examination was due to be completed on the morning of 3 October 2025 and then to be followed by closing submissions on behalf of both parties. However, on the morning of 3 October 2025, HMRC’s representatives informed the Tribunal that HMRC had withdrawn the decisions and the assessments that formed the subject of the appeals, and that the input tax that had been disallowed would be credited to OBT’s account. Ms Hickey and Mr Matthews agreed to send a copy of the relevant email to the Tribunal. They have since done so. Ms Hickey and Mr Matthews also submitted that the effect of the withdrawal of the decisions and the relative assessments was that the Tribunal had no jurisdiction to determine the appeals and the appeals must be struck out.

Having heard argument on behalf of both parties, the Tribunal gave its decision at the hearing to strike out the proceedings under rule 8(2)(a) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “FTT Rules”) on the grounds that the Tribunal did not have jurisdiction in relation to them. The Tribunal based its reasons for that decision on the decision of the First-tier Tribunal (“FTT”) in Align Technology Switzerland GmbH and Align Technology BV v HMRC [2024] UK FTT 001100 (TC) (“Align”). At Mr Firth KC’s request, the Tribunal also agreed to provide written reasons for its decision. This decision notice contains those written reasons.

It will assist our explanation if we first set out the relevant legislative background.

Section 83 VATA sets out the matters in relation to which a person can appeal to the Tribunal. So far as relevant, it provides as follows:

Section 85 VATA concerns cases in which an appeal is settled by agreement between an appellant and HMRC. Subsection (1) is in the following form:

Rule 8 FTT Rules deals with circumstances in which the Tribunal may strike out a party’s case. Rule 8(2)(a) FTT Rules provides as follows:

As we have mentioned above, the appeals made by OBT in this case comprise: (i) an appeal under section 83(1)(c) against HMRC’s decision that it was not entitled to input tax credit in respect of certain purchases from its suppliers; and (ii) appeals under section 83(1)(p) against the VAT assessments issued by HMRC on 5 May 2023. HMRC withdrew the decision and the related assessments by email on the morning of 3 October 2025, the third day of the hearing.

Mr Matthews submitted on behalf of HMRC that the effect of the withdrawal of the decision and the related assessments was that there was no appealable decision before the Tribunal. He referred to the decision of the Court of Appeal in R (on the application of Chichvarkin) v Secretary of State for the Home Department [2011] EWCA Civ 91 (“Chichvarkin”) as authority for the proposition that HMRC had power to withdraw its decision as a matter of general public law unless such a power was excluded (Chichvarkin [63]-[64]). The power was not excluded and so HMRC was entitled to withdraw the decision and the assessments. Having done so, there was no appealable decision. The Tribunal had no jurisdiction and must strike out the proceedings under rule 8(2)(a) FTT Rules. Mr Matthews referred the Tribunal to the decision of the FTT in Align in support of that conclusion.

Mr Firth KC, for OBT, agreed that there was no appealable decision under section 83(1)(p) VATA as that section expressly referred to an appeal against an “assessment”. However, he submitted that there remained an appealable matter under section 83(1)(c) VATA. Section 83(1)(c) did not refer to a decision or an assessment. It simply referred to “the amount” of input tax credited to a person. The point was emphasised by section 83(2) VATA, which provided for matters within section 83(1), which did not involve a decision, to be treated as a decision for the purposes of the relevant part of VATA. Furthermore, section 85(1) VATA provided for matters, which were before the Tribunal to be settled by agreement. It was implicit that if there was no such agreement, the matter remained before the Tribunal and for the Tribunal to determine. He sought to distinguish the FTT decision in Align. That decision related to an appeal under section 83(1)(b) VATA not section 83(1)(c). Furthermore, the Tribunal was not bound by that decision.

We agree with HMRC, our reasons are set out below.

As a starting point, the case law is clear. The Tribunal is a creature of statute. Its jurisdiction is entirely statutory (R & J Birkett v HMRC [2017] UKUT 89 (TCC) at [30]).

In the present case, the matters that can be brought before the Tribunal are those that fall within section 83(1) VATA. As we have mentioned, OBT’s appeals are made under section 83(1)(c) and section 83(1)(p) VATA.

We were referred by Mr Matthews to the decision of the FTT in Align in which similar arguments were raised by HMRC. The appellants in that case brought appeals under both section 83(1)(b) VATA and section 83(1)(p) VATA. The appeals under section 83(1)(b) related to HMRC’s decision that certain supplies made by the appellants were subject to VAT at the standard rate. The appeals under section 83(1)(p) were against assessments made by HMRC for various periods on the basis that supplies made by the appellants were subject to VAT at the standard rate.

Following the notification of the appeals to the FTT, but before the hearing of the appeals, HMRC withdrew the decision and the assessments and asked for the hearing of the appeals to be vacated. At a case management hearing to consider that request, the FTT (Judge Sinfield) decided that the FTT had no jurisdiction to hear the appeals against assessments because there was no longer any matter within section 83(1)(p) against which to appeal. After referring to the decision of Judge Bailey in Charles Kendall Freight Ltd v HMRC [2024] UKFTT 492 (TC) (“C K Freight”) – and agreeing with her comments (at C K Freight [48]) on the desirability of HMRC withdrawing from an appeal under rule 17 FTT Rules rather than withdrawing the underlying decision – Judge Sinfield said this (at Align [52]):

The FTT therefore struck out the appeals against the assessments under rule 8(2)(a) FTT Rules. Judge Sinfield confirmed that the same reasoning (with the same consequences) would apply to the appeals under section 83(1)(b) if HMRC had withdrawn the decision that the appellant’s supplies were subject to VAT at the standard rate (Align [54]). However, on the facts, the FTT found that HMRC had not withdrawn that decision. This was because, although the decision was withdrawn in relation to the periods that had been assessed, HMRC had not conceded that their decision was wrong in law (Align [57]). The question of principle – whether the appellants’ supplies were subject to VAT at the standard rate – remained, and was potentially relevant to later periods in which the appellants had made similar supplies (Align [58]-[59]).

The FTT therefore directed that the appeals under section 83(1)(b) VATA should proceed to a hearing.

The decision of the FTT in Align is not binding upon us. It is of persuasive authority only. However, we have no reason to believe that it is wrong. And so, we propose to follow the principles in it.

As we have mentioned above, Mr Firth KC conceded that as a consequence of HMRC’s withdrawal of the decision and the assessments, there was no longer any appealable matter under section 83(1)(p) VATA. It followed that the appeals against the assessments must be struck out under rule 8(2)(a) FTT Rules because the Tribunal no longer had jurisdiction. Mr Firth KC was clearly right to make that concession. However, Mr Firth KC submitted that the Tribunal continued to have jurisdiction over the appeal under section 83(1)(c).

We reject Mr Firth KC’s submission.

The question for us is whether there remains in issue between the parties a decision of HMRC regarding “the amount of any input tax” which may be credited to OBT.

The decision which is the subject of the appeal under section 83(1)(c) is HMRC’s decision to reduce OBT’s input tax credit for the 10/21 period from £782,239 to £205,056. The basis of that decision was HMRC’s refusal, in the absence of a valid VAT invoice, to exercise its discretion under regulation 29(2) of the Value Added Tax Regulations 1995 to accept the alternative evidence provided by OBT that it incurred the input tax.

It was common ground between the parties that the Tribunal’s jurisdiction in such cases is supervisory. This is the case whether the challenge is to a decision by HMRC not to consider alternative evidence or to a decision by HMRC decision that the alternative evidence was not sufficient (see, for example, FS Commercial Limited v HMRC [2025] UKUT 13 (TCC) at [107] (“FS Commercial”)). The exercise of discretion can only be challenged by the taxpayer on the ground that it is a decision that no reasonable decision-maker could have reached (FS Commercial [107] and [109]).

The appeal under section 83(1)(c) therefore involves an enquiry into the particular decision of the particular decision-maker, in this case, Officer Bamford. It is necessary to take into account the relevant facts and circumstances in which he made that decision including, for example, the information that was before him at the time. In our view, that is a very different question from that which arose in the section 83(1)(b) appeals that were before the FTT in Align. In that case, the FTT concluded that there was no real withdrawal of the decision that the appellants were making standard-rated supplies. Even if the purported withdrawal had some practical effect in relation to the periods under assessment, the question of principle remained. The question of “the VAT chargeable on the supply of… goods or services” (section 83(1)(b)) was still in issue. In contrast, in the present case, the enquiry is into the decision itself and the manner in which it was made. Once the decision is withdrawn, there is no remaining question of principle for the Tribunal to determine in relation to any “amount” of tax for the purposes of section 83(1)(c) VATA.

We should deal briefly with the arguments put to us by Mr Firth KC.

For the reasons that we have set out above, once it is accepted that HMRC has withdrawn the decision, the Tribunal has no jurisdiction in relation to the proceedings relating to the appeal under section 83(1)(c). That appeal must also be struck out under rule 8(2)(a) FTT Rules.

In accordance with the FTT’s decision in Align (Align [52]), the Tribunal retains jurisdiction to deal with any consequential matters even where the substantive appeal has been struck out. It is for OBT to decide whether it wishes to make any such consequential applications.

We strike out these appeals.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.