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Hardship Application refused

28th Apr 2020
VAT Consultant vatadvice.org
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There is a clear principle that a taxpayer may not pursue an appeal against a VAT assessment without first paying the VAT assessed. Whilst this is often waived by HMRC, it is not always. One recent case highlighted how difficult it can be to overturn a HMRC decision that it would not cause the taxpayer hardship to pay the amount assessed.

When applying to HMRC, a substantial questionnaire has to be completed. This is to be accompanied by details of debtors, overdraft, bank covenants, company investments, copies of Annual Accounts and recent Management Accounts. HMRC also ask what options the taxpayer has in raising additional finance. (Will a bank ever forward money to a customer to enable it to fight a VAT assessment?)

Ultimately the company failed to provide all this information, and the Tribunal found against it.

A further issue in this case was that the taxpayer company argued that it was owed by HMRC sums in excess of the amount assessed. This includes VAT and CIS amounts. (The company is in construction, as you guessed.)  The Tribunal commented that the taxpayer had to provide the required information before the matter of refunds due to it could be considered. Further, where refunds were due under the CIS scheme, those cannot be offset until its annual return under PAYE Reg 73 has been submitted. The company was clearly unaware of these legislative nuances.

This is the decision: www.bailii.org/uk/cases/UKFTT/TC/2020/TC07638.html

 

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