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Barlin Associates v HMRC

In Barlin Associates v HMRC [2014] UKFTT 957 (15 October 2014) the FTT found that a reduction of the consideration entitled the supplier to a VAT repayment.

Barlin was a trademark attorney. Between 2005 and 2010 it carried work for Autonomy under a general retainer. Barlin issued various invoices on which it accounted for VAT but Autonomy did not pay the invoices and Barlin did not make any claim to recover VAT.

Barlin issued a claim for payment against Autonomy which paid £306 000 in full and final settlement of the original claim for £871 000. Barlin issued Autonomy with a credit note in relation to the VAT corresponding to the foregone consideration. Barlin then claimed repayment of the balance of the VAT but HMRC refused.

The FTT first pointed out that there was no bad debt as Autonomy owed nothing to Barlin. HMRC’s argument that...

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