In a shocking case, HMRC had issued a Notice of Security against a Mexican restaurant for around £29,000.
The Tribunal commented: “This is an appeal by the appellant, Pachangas Mexican Restaurant Limited, against a decision of the respondents requiring the appellant to provide security in the sum of £29,450 against future VAT sums due. The requirement was made by a written notification served on 27 September 2017. That notification was a bare requirement to provide security. It gave not a single reason to explain why the respondents were making the requirement. It is a very serious requirement. The respondents informed the appellant by their letter dated 19 October 2017 that if the appellant made taxable supplies without the security being provided, the appellant would be committing a criminal offence contrary to section 72(11) Value Added Taxes Act 1994.”
Further, the Officer who made the decision failed to attend the Tribunal Hearing, giving the taxpayer no opportunity to challenge her approach.
The Tribunal decision referred to a number of Court decisions which underline two important principles (1) that reasons must exist for all public law decisions and (2) those reasons must be communicated to the other party. Although none of those decisions are related to VAT, the principles are consistent (see para 17).
The Tribunal heard evidence on the taxpayer’s particular circumstances but did not make any findings of fact. Indeed, it referred to ‘evidentially unsupported facts’ in HMRC’s Statement of Case.
The decision is a helpful resource for taxpayers and is remarkably restrained given HMRC’s negligence!
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.