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VATman keeps making life more difficult for businesses

 By

SteveAllen

Sadly Steve Allen died in July 2011. His wife Leah would like to thank all those who know Steve and helped contribute to his success. She has recommends Steve's clients and anyone who is interested in this article topic to contact Rob McCann from “The Vat people” on (tel) 0161 477 6600 . Please make reference to Steve Allen.


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It has generally been accepted that if you have obtained a written ruling from the VATman and it is wrong he will stand by it until he discovers the error and corrects it from a current date.

This has been covered by an Extra Statutory Concessions (ESC 3.5) which states:

Misdirection: “If a Customs and Excise officer, with the full facts before him, has given a clear and unequivocal ruling on VAT in writing or, knowing the full facts, has misled a registered person to his detriment, any assessment of VAT due will be based on the correct ruling from the date the error was brought to the registered person's attention.”

This covers both positive misdirection where an officer gives specific advice that is incorrect and misdirection by omission where an officer misses something so obvious that the taxpayer assumes that he is doing it correctly, but this is more difficult to prove.

So, if possible always get the VATman to confirm any advice he gives in writing. If you provide the VATman with all the facts and get a written ruling from him he should stick by it, even if the information he has given you is wrong. All he will be able to do is make you do it correctly in the future – no assessment!

However, the VATman is getting more aggressive and when he finds that the wrong liability ruling has previously been given he frequently issues an assessment for wrongly declared tax even when there is a clear written ruling advising on that treatment.

The problem with ESC’s is that they do not have the force of law and the VATman can use his discretion in applying them or not. As they do not have the force of law it is not possible to appeal to a VAT Tribunal if you think the VATman has wrongly applied them, which reduces your rights as a taxpayer.

If he will not apply the ESC relating to misdirection your only recourse is to write to the complaints unit, however, this now tends to be a rubber stamping exercise and they nearly always back the Departments view. The common excuse now is that the officer who gave the original incorrect ruling ‘was not is possession of the full facts’. This is a lame excuse but they hope that the taxpayer will give up and go away. If this happens you then have to complain to the manger of the Complaints Unit. This is again a futile exercise as they always back their staff’s decisions but you have go through this hurdle before you can complain to the independent Adjudicator.

The Adjudicator is responsible for looking into cases of mal-administration by the VATman and can order him to put matters right and award compensation and costs if it is thought necessary.

The Adjudicator is completely independent and, although a civil servant, is not employed by Revenue & Customs. The Adjudicator will give you a fair hearing and takes a dim view of the VATman trying to get out of his responsibilities when he has provided inaccurate advice to the detriment of the taxpayer.

The downside with this process is that the Adjudicator is (not surprisingly) snowed under with complaints and is taking 9 months to a year to deal with complaints. During the process the VATman is still entitled to enforce the assessment so you may have to pay up while you waiting for a decision (although if you win you will get interest).

The Adjudicators can be contacted at:

  • The Adjudicator's Office
  • Haymarket House
  • 28 Haymarket
  • LONDON
  • SW1Y 4SP
  • Tel: (020) 7930 2292
  • Fax: (020) 7930 2298
  • E-mail: adjudicators@gtnt.gov.uk
  • Internet: http://www.open.gov.uk/adjoff/aodemo1.htm

About the Author

Steve Allen is the Director of VAT Solutions (UK) Ltd, an established independent firm of Chartered Tax Advisers, formed by Andrew Needham and Steve Allen. Both not only are respected tax advisers, but have worked for both Customs & Excise and one of the top four accountancy firms for many years. This mean that their team know both sides of the equation and are truly experts in this field.

The company has a cross-section of clients from multi-national companies through to medium-sized and numerous smaller regional firms of accountants and solicitors. They produce a regular publication 'VAT Voice', which can be downloaded directly from their website www.vatsolutions-uk.com.



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Article Published/Sorted/Amended on Scopulus 2007-01-17 20:58:15 in Tax Articles

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