Incorrect use of flat rate scheme

Good character statement from HMRC need not be produced

The taxpayer was a freelance journalist. He registered to use the VAT flat rate scheme (FRS) but operated it incorrectly by calculating the rate on the net turnover instead of using the VAT inclusive figure. The additional VAT due was £2 868 and HMRC issued assessments to recover it.

The taxpayer appealed to the First-tier Tribunal. He contended that the FRS was poorly designed HMRC misrepresented the scheme to customers the letters to him from HMRC were gobbledygook and an HMRC officer had told him that the department knew there were problems with the scheme.

He applied to the tribunal for a number of documents from HMRC including all internal and external communications files and records relating to customers and internal concerns that had arisen over purported flaws in the FRS. He also required production of...