HMRC is questioning my input tax claims, what do I do?

HMRC's starting position is that input tax needs a valid VAT invoice and a genuine business purpose before it can be reclaimed. When it questions your claims, it's usually because one or both of these is unclear from what it's seen.

Common triggers include large one-off claims, costs that look partly personal, entertainment expenditure, which is generally blocked regardless of invoices, and claims where the supplier's VAT registration can't be verified.

The right response is to produce the underlying invoices and explain, where needed, how the cost relates to your taxable business activity, rather than assuming the claim will simply be accepted because it's on your return.

Schedule 11 VATA 1994, alongside the VAT Regulations 1995, sets the evidence needed to support an input tax deduction, generally a valid VAT invoice showing the supplier's details, the VAT charged, and a description of the supply.

Certain categories of VAT are blocked from recovery altogether regardless of invoicing, most notably business entertainment and most costs relating to cars, subject to specific exceptions.

Where HMRC isn't satisfied the evidence supports the claim, it can reduce or disallow the input tax and, under section 73 VATA 1994, assess for VAT already reclaimed without adequate support.

If your bookkeeping relies on receipts or statements rather than proper VAT invoices, you're exposed here; HMRC can and does disallow claims that lack the specific invoice detail required, even where the spending clearly happened.

Costs that mix business and personal use, such as a vehicle or a phone contract, need a reasonable apportionment with evidence behind it, not simply a full claim because the invoice happened to be in the company's name.

If a supplier turns out not to be properly VAT registered, or their VAT number doesn't check out, HMRC can disallow the input tax you claimed even though you paid VAT in good faith, so verifying suppliers matters.

A disallowed claim means repaying the input tax previously reclaimed, plus interest from when it was over-claimed, calculated by reference to the Bank of England base rate.

If HMRC views the claim as careless, for example claiming without checking invoices were valid, a penalty under Schedule 24 Finance Act 2007 can apply on top.

Growth plan clients get free tax investigation insurance included, which can cover professional costs of defending or correcting an input tax dispute. See /fees for what's included.

Don't claim input tax based on a card statement or receipt alone; you need a proper VAT invoice showing the supplier's VAT registration number.

Don't claim VAT on business entertainment expecting it to slip through; it's specifically blocked and is a routine area HMRC checks.

Don't assume every cost paid by the company is automatically fully reclaimable; personal use elements need to be identified and excluded from the claim.

Pull together the actual VAT invoices behind each queried claim rather than summaries from your accounting software, since HMRC wants to see the original document.

Where an invoice genuinely can't be found, consider whether alternative evidence, such as a contract or supplier statement, might satisfy HMRC, though this is discretionary and not guaranteed.

If HMRC still disallows a claim you believe is valid, ask for the reasoning in writing and consider a statutory review or appeal if the evidence supports your position.