VATman keeps making life more difficult for businesses
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
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
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
- SW1Y 4SP
- Tel: (020) 7930 2292
- Fax: (020) 7930 2298
- E-mail: email@example.com
- 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
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Article Published/Sorted/Amended on Scopulus 2007-01-17 20:58:15 in Tax Articles