Handy quirk

The taxpayer restaurant was registered for VAT between 2006 and 2008 when it deregistered because its turnover fell below the threshold.

The business notified HMRC on 17 November 2011 that it should be re-registered for VAT from March 2011.

The Revenue checking the taxpayer’s turnover figures for the period from April 2010 to November 2011 and found it should have registered again for VAT from November 2010.

The department imposed a penalty for late registration acknowledging the omission to notify was not deliberate and disclosure had been unprompted but the penalty would be between 10% and 30% of the potential lost tax because the disclosure was more than 12 months late.

The taxpayer appealed. It argued that the fine should be calculated according to when the VAT “first becomes unpaid by reason of the failure” to disclose (FA 2008 Sch 41 para 13(5)(a).

HMRC said...