Supplies were VATable, but assessment was out of time
HMRC is notoriously strict on taxpayer deadlines, e.g. when making claims for tax relief. However, it must also follow the rules. In a recent tribunal case, HMRC was told it was too late to collect underpaid VAT of nearly £250,000. What went wrong?
The taxpayer (GG) is a registered nurse, qualified as a prescriber, and sold treatments for skin disorders, mainly ultraviolet. She had exceeded the compulsory registration threshold, but did not register as she believed the treatments were exempt as “medical care”. HMRC disagreed and said they should be standard-rated as the treatments were largely cosmetic. The tribunal agreed with HMRC on balance, and said that the supplies from November 2007 to February 2018 should have been subject to VAT at the standard rate. HMRC had raised an assessment for £212,897.
The problem for HMRC was that it had issued the assessment in March 2021, and the timeframe under s.73 VAT Act 1994 only allows twelve months from the end of the relevant period in these circumstances, namely after sufficient evidence of facts to determine the VAT due are obtained by the officer. HMRC had argued that the submission of a VAT return by GG meant new information, and therefore a later deadline, but the tribunal dismissed this as it was a nil return. The case is a reminder to always check assessments for any tax have been correctly issued within the relevant time limits.
Related Topics
-
Company buying back shares? Watch out for forthcoming changes
Company owners arranging a retirement, a family succession or a shareholder exit may need to rethink how shares are bought back. The Budget confirms that the government intends to tighten the rules distinguishing capital gains from dividend income, potentially making some buybacks considerably more expensive. How might an ordinary business exit be caught?
-
What can you learn from HMRC’s input tax toolkit?
You know that penalties can be charged on careless errors and many mistakes relate to input tax being wrongly claimed. How can HMRC’s input tax guidance help your business to claim the right amount?
-
A £3,000 side-hustle allowance: more generous than it looks?
People making money from small side businesses will have more room to earn without paying income tax, following a Budget decision to triple the trading allowance. However, the figure relates to what you receive before expenses, not the profit you keep. Will the £3,000 allowance actually save you tax?