No retrospection permitted

The taxpayer owned a dress agency business which she had taken over as a going concern in October 2006 and continued to complete quarterly VAT returns.

In November 2010 she applied to deregister on the basis of reduced turnover and requested the deregistration be backdated to September 2010 explaining she could have applied to deregister in 2008.

HMRC said her deregistration could not be retrospective; it would have effect from November 2010.

The taxpayer appealed.

The First-tier Tribunal sympathised with the taxpayer agreeing she could have deregistered for VAT two years before. However the law was clear: the Revenue ha no power to make retrospective deregistration.

The taxpayer’s appeal was dismissed in a decision that shows the importance for advisers to monitor closely a business’s sales according to Neil Warren independent VAT consultant.

He said ‘If taxable sales in the next...