Save time not tax

Retrospective entry to the flat rate scheme

The taxpayer a solicitor applied to join the VAT flat rate scheme on 6 May 2014 but requested that it be backdated to 1 July 2012. HMRC refused to allow him retrospective use of the scheme and said he could use it from 1 March 2014.

The taxpayer appealed. He said HMRC’s approach of treating the scheme as a way of ‘simplifying’ VAT accounting was flawed and that taxpayers would take advantage of it only if it had a tax beneficial or neutral outcome.

The First-tier Tribunal said HMRC had acted reasonably in refusing to backdate the taxpayer’s entry to the scheme. The Revenue’s position was clear: retrospective entry was not allowed for periods when the applicant had already calculated his VAT liability. The aim of the scheme was to reduce the administrative burden of dealing with VAT not help...