Wrong category?

The taxpayer was a mechanical engineering company the director of which decided to use the VAT flat rate scheme

He found no category appropriate to the business’s range of services and picked the classification of “any other activity not listed elsewhere”.

HMRC said the choice was incorrect and deemed the right category to be “architects civil and structural engineers and surveyors”. The taxpayer appealed.

The First-tier Tribunal found that the company was involved in the field of mechanical engineering. The director was not a chartered engineer and did not have a university degree. He was a trained mechanical engineer which was distinct from civil or structural.

There was an “obvious defining line between mechanical engineering and the other two categories of engineering activity mentioned” the judge said.

The flat rate scheme chosen by the director was appropriate and the company’s appeal was allowed.