This appeal concerned the correct approach to evidence and the burden and standard of proof in the context of historic claims for the recovery of input VAT in a claim relating to input tax dating from 1974 onwards. Input tax is the VAT incurred when the taxpayer buys in supplies which it uses for the purpose of a business activity.

The NHS Lothian Health Board and its predecessors operated several scientific labs, which primarily provided clinical services to the NHS. This was a non-business activity and so any input VAT incurred on this type of work was not recoverable.