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HMRC refusal to re-register a business

21st Dec 2021
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HMRC had cancelled the VAT registration of S&S Consulting Services (UK) Ltd on the basis that the company was principally or solely registered to abuse the VAT system.

The company sought an injunction to force HMRC to allow them to re-register, to allow it to continue to trade.

The High Court (Administrative Court) division makes interesting reading. Paras 15-16 address HMRC’s power to cancel a registration and refuse to allow a registration. This is for the prevention of abuse of the system, which is a principle from EU case law, which has retained its force in the UK (sorry, Nigel!). Brexit has not altered this position. Even so, VAT Act 1994, s83 does provide a right of Appeal to the Tax Tribunal in relation to registration and deregistration. At para 20, the Court seemed to suggest that the taxpayer could use this right. If successful, HMRC would be forced to re-register the taxpayer.

After a long digression into the relevance of an injunction, the Court concluded (para 103) that the proper place for the argument was the First Tier Tribunal. This is an expert and knowledgeable setting for such matters (albeit not infallible).

Had HMRC acted in ‘an unfair and egregious fashion,’ then an abuse of power could be argued. But the Court indicated that, although there were some failings by HMRC, they had engaged with the taxpayer throughout. Their decision to cancel the registration should be appealed through the usual channel.

www.bailii.org/ew/cases/EWHC/Admin/2021/3174.html

 

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