Curtains drawn on VAT

The taxpayer bought a secondhand curtain shop in May 2000. She took over the VAT registration of the previous owner because her acquisition was a transfer of a going concern. Trading went well until July 2008 when she fell ill closing the shop in December.

She submitted a form VAT7 to apply for a cancelation of her VAT registration saying she expected her taxable supplies to be worth £20 000 in the year to December 2009.

The taxpayer began selling furniture on commission in July 2010. Her turnover was below the VAT registration threshold.

HMRC said they did not receive her application to cancel her registration which they would have refused because VAT returns were outstanding. The taxpayer appealed.

The First-tier Tribunal found it was not reasonable for the Revenue to be unsatisfied that the taxpayer was not liable to be VAT registered from December 2008.