HMRC has lost its long running VAT battle with BPP, because it failed to obey the Tribunal’s rules.
In January 2015 we reported the shoddy performance of HMRC in the BPP Holdings Limited case, which hinged on whether certain publications should be subject to VAT at the zero rate as books, or at the standard rate because they were part of a supply of education services.
HMRC was barred from proceeding with the case at the First-Tier Tribunal because it didn’t comply with an order by the Tribunal to provide full details of its arguments against BPP within a specified time scale. That ruling was over-turned at the Upper Tribunal.
Now the Court of Appeal has decided that HMRC’s approach to complying with the Court’s rules was “disturbing”, and has reinstated the barring order. This means that HMRC can’t continue with the case, and BPP has effectively won.
HMRC had the cheek to claim the constraints placed upon it by austerity measures within the department meant that it should in some way be excused for its unacceptable behaviour. The judge was not impressed and said “... a State party should neither expect to nor work on the basis that it has some preferred status – it does not.”
This not the first time that HMRC has been caught disobeying court orders as my earlier article gave several examples of when HMRC doesn’t play by the rules in tax cases.
If you find yourself up against what you perceive as unfair practices by HMRC, you can complain to the Tribunal judge whose first responsibility is to ensure that both sides get a fair hearing. Also make sure you are well prepared for the hearing by studying the guidance in the Tribunal Service leaflets T242 and T243.
About Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.