£414k input tax claim not exempt from VAT

The European Court of Justice has ruled that a company cannot recover input tax worth £415,000 on supplies from the Royal Mail which had been incorrectly treated as exempt from VAT when in fact they were taxable

The Court of Justice of the European Union (ECJ) has ruled that Zipvit Limited could not recover input tax worth £414, 763 plus interest on supplies from Royal Mail.

Zipvit Limited works in supplying vitamins and minerals delivered by Royal Mail, which negotiated a contract directly with Zipvit. The company is a registered trader for VAT purposes and all of the supplies that it makes to its customers are standard-rated.

In the period from 1 January 2006 to 31 March 2010 Royal Mail treated its sales to Zipvit, and other businesses with which it contracted individually, as exempt from VAT.

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