Misunderstandings about the cash accounting scheme by the taxpayer and HMRC led to errors in VAT returns and assessments - but they were not deliberate.
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There are times when I read a VAT tribunal report and come to a simple conclusion: “The taxpayer confused HMRC and HMRC confused the taxpayer – let sleeping dogs lie and don’t let it get to the tribunal.”
That was the situation in the case of Michael Robinson (TC7951). HMRC issued him with a personal liability notice (PLN), but it was incorrect because he had not made any deliberate inaccuracy on the VAT returns submitted by his company PMR Ltd.
Robinson won his appeal against the PLN.
The facts
Robinson had an interest in three companies; two were building companies and could not use the cash accounting scheme (CAS) because their annual taxable sales exceeded the joining threshold of £1.35m (VAT Notice 731, para 2.1). The CAS means that output and input tax is included on a VAT return based on payment rather than invoice dates.
The other company (PMR) supplied project management services to the two building companies and was eligible to use the cash accounting scheme.
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