Member Since: 30th May 2000
28th Oct 2010
Unless I have misunderstood the facts, your client has not made any misdeclaration as regards the recovery of input VAT. He has purchased stock for resale, albeit intended for export. He is not required to actually sell that stock in order to recover the VAT paid. Only if he has sold the stock and failed to account correctly for the VAT on that sale might there be an error, so in this case, it would seem that as the stock remains in his possession, and has not been sold to anyone else, there is no error. The inspector can threaten all he likes, but even the reconsideration team at HMRC should throw an assesment of this sort out.
The one thing I would do though is to double check that all of documentation for the export sales meets the criteria set out by HMRC in Notice 703. if the Inspector in question takes umbrage at being so badly wrong, he may look at this area very carefully.
18th Jun 2010
Fight it all the way
Do not give in. The effect of the surcharge is that any late filing of a return or payment in the next year will trigger a penalty. Write, very firmly to the VAT registration unit - who is clearly responsible for the mistake. Point out the error. Request that they get the default surcharge notice withdrawn. Inform them that if they fail to do so, compensation for any additional costs incurred will be sought. If no response, appeal to the Tax Tribunal - as soon as anyone with an ounce of sense at HMRC sees the case, they will cave in. They do not want to take hopeless cases before the Tribunal.
18th Jun 2010
Check the facts and take expert advice
Depending on the facts, it is quite possible that HMRC are out of time to make an assessment for VAT going back that far. You need to find out exactly what your client was doing at the time and get copies of ALL correspondence sent by (and to) HMRC. Then consult a specialist VAT consultant. I am happy to help if you don't have a regular contact to use.
21st May 2010
Be vary careful
You need to take specialist VAT advice before your client exchanges contracts. Depending on the exact facts of the transaction, the VAT treatment differs greatly. Even the final VAT liability of the apartments. I encountered a developer some years ago in this exact position, who decided he didn't want to pay for specialist advice. It took him 5 years to get £95,000 of VAT back - and two Tribunal hearings.
If you have a specialist adviser, call them. If not, send me an e-mail.
9th Mar 2010
John, you have most of the key issues covered. The only one you have missed is a partnership agreement, which ensures that the partnership is governed as the partners wish, rather than according to Partnership Law. Transfer from a partnership to a LLP, with the same partners is relatively straightforward, but there can be tax issues which need to be considered before taking the plunge. I am based in Henley if you want to talk to me.
25th Nov 2009
Check your client's position carefully, then appeal if you have
As a non legal member of the First Tier Tax Tribunal, do not be concerned about the formalities of the process. However, you should bear in mind that HMRC will usually be represented by staff or counsel who are used to presenting at Tribunal.
There are two key elements, the facts and the law. The Tribunal finds the facts and then applies the law. If you can persuade the Tribunal to find the facts in your favour, then your task is much easier. However, you do need to know which parts of the law are relevant. If the client has insurance, or there is a large amount at stake, do consider consulting a tax counsel, or a status expert. It is easy to get bogged down in a case and let emotion take over.
Finally, if you have now reached an impasse, request a detailed explanation from HMRC of exactly why they consider the individuals in question to be employed, including reference to the facts and the relevant law. That will make it easier for an expert to assess if you have a case, and much easier to fight at Tribunal. If it is truly a grey area, then HMRC may have problems putting together a coherent argument.
11th Nov 2009
Consider making an appeal to the Tax Tribunal
If you have not yet agreed a binding settlement, then the simplest course of action would be for you to inform HMRC that you will be appealing this matter to the Tax Tribunal, but that you will request that the case is stood over pending the result of the case you have referred to in your question. The amounts in dispute are clear, therefore it is purely the legal point which is at issue, which will eventually be decided upon by the Courts in any event. HMRC should accept such a stance, since they frequently take such a position themselves. Costs of making an appeal are negligible until you get closer to the hearings, and the Tribunal has been set up to allow taxpayers to represent themselves, or have advisers represent them, not just lawyers.
28th Aug 2009
Do as you would advise your clients to do
If you buy a company, you buy all of its assets and liabilities (known or unknown), you are therefore on the hook for any issues that emerge after your purchase. This requires a detailed contract of sale, with comprehensive warranties from the vendor. On the other hand, if you purchase the goodwill of the business, you leave behind all of the liabilities which you do not want (including unknown liabilities). It then becomes a commercial matter for you and the vendor as to which way you go and whether the price payable is adjusted accordingly.
1st Apr 2009
place of supply
It all depends on the contract with the end customer. If the goods are located outside the EU at the time they are sold to the end customer, then that supply takes place outside the EU and UK VAT does not apply - however, import VAT and duty may be payable by the end customer - with the associated delays this can cause. If this is likely to affect the sales, then it may be more practical to import the goods wholesale and then sell them within the UK plus VAT. The business needs to see what works for it. Bear in mind that if the goods are below the threshold for import VAT/duty, this could be changed in the future. I am aware that there was pressure on HMRC to do this when large quantities of CD's were sold in this way from the Channel Islands.
1st Apr 2009
File on line
If your client registers to file on line, then he will be able to file any outstanding returns and will then know that the return has been received. Very likely to be quicker than waiting for a duplicate.