Hardship Appeal – Upper Tier Tribunal

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Many of us will be familiar with the way a taxpayer applies for ‘hardship’ when he makes an appeal to the First Tier Tribunal.

When he wants to take his appeal further, different rules apply. The case of Snow Factor Ltd considers this matter.

The underlying issue was whether the reduced 5% VAT rate applied to certain supplies of transport by lift, or whether those supplies were subsumed within a larger standard rated supply (i.e: following Card Protection Plan). The FTT found against the taxpayer, and he appealed to the Upper Tier.

But, should he pay the VAT assessed before the substantive Upper Tier Hearing? Oddly HMRC started by asking for a sum higher than that originally assessed (para 7) but this may refer to later assessments issued after the original appealed decisions.

Another comment caught my eye:

The applicant is entitled to continue to account for VAT on the basis that the FTT’s decision was wrong in law and then be assessed by HMRC accordingly (and presumably appeal the assessments). (para 80)

I have found that HMRC sometimes issue penalties for ‘deliberate’ behaviour in such circumstances. So I would not normally advise a client to account for a lower amount of VAT without clear indication on this point from HMRC.

The Upper Tier decision is here: http://www.bailii.org/uk/cases/UKUT/TCC/2019/77.html

About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


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