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Auxilium Project Management Ltd (TC5024)
Deliberate or careless behaviour
E used to provide her services through C&D but the company was wound up and she set up the taxpayer company (APM). C&D claimed input tax on its September 2014 VAT return for an invoice it had paid APM. However the equivalent output tax was not declared in APM’s September return. She should have declared output tax because she was on the cash accounting scheme so the gross receipts received from C&D should have been treated as VAT inclusive.
An HMRC visiting officer said E had submitted two VAT returns where output tax was missed off one but input tax claimed on the same transaction on the other. The officer imposed a 20% penalty on the basis that this constituted unprompted disclosure of a deliberate error not concealed. The disputed VAT return was completed by the company’s external accountants who took responsibility for the mistake.
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