UK Import VAT Recovery: HMRC confirms ownership still matters

November 17, 2025 Globale Mehrwertsteuer-Updates

The First-tier Tribunal’s decision in TSI Instruments Ltd v HMRC [2025] UKFTT 1278 (TC) sends a clear message to businesses operating in the UK: import VAT is only recoverable if you legally own the goods.

In a pivotal decision for UK VAT law, the Tribunal confirmed that import VAT paid on goods not owned by the importer cannot be reclaimed as input VAT. This case draws a firm line around the conditions for VAT recovery, emphasising the critical role of ownership and direct business use.

Hintergrund:

TSI Instruments Ltd, a UK-based company specialising in scientific equipment, imported instruments into the UK for repairs. These items, however, remained the property of TSI’s customers throughout the process.

Despite paying the import VAT, TSI sought to reclaim the import VAT paid, arguing that:

  • The goods were imported for the purpose of its taxable business.
  • It bore the cost of importation.
  • There was no explicit requirement in legislation to hold legal title to the goods.

HMRC disagreed, denying the claim on the basis that TSI did not own the goods and therefore could not meet the statutory conditions for VAT recovery.

Judge Robin Vos sided with HMRC, ruling that legal ownership at the time of import is essential for input VAT deduction. The decision aligns with the case Piramal Healthcare UK Ltd v HMRC [2023], reinforcing that cost-bearing alone is not enough.

Key Findings:

  • Ownership is essential: Only the legal owner of imported goods can reclaim the associated import VAT.
  • Cost-bearing is insufficient: Paying import VAT does not entitle a business to recover it if ownership is lacking.
  • Contractual clarity is essential: Businesses must ensure that contracts and pricing structures reflect ownership status to support VAT claims.

Practical implications for businesses:

Businesses should take proactive steps to ensure compliance with the principles confirmed in TSI v HMRC:

  • Ownership verification: Ensure your business holds legal title of the goods at the point of entry into the UK.
  • Contract structuring: Contracts with suppliers, customers, or logistics providers should clearly state who owns the goods at each stage of the supply chain.
  • Import documentation: Import declarations, invoices, and customs paperwork should align with the ownership position shown in contracts to support VAT recovery.

Conclusion:

The TSI Instruments ruling sets a clear precedent that VAT recovery hinges on ownership. Businesses must not assume that paying import VAT or using goods in their operations automatically grants VAT deduction rights.

If your business imports goods for repair, processing, or resale, now is the time to review your contracts and supply chain documentation.

For guidance on UK import VAT recovery and compliance strategies, reach out to Meridian’s team of VAT specialists, to provide tailored advice to help your business navigate these challenges.

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