Advance VAT security deposit required from the company

HMRC decided that there was a concern about the taxpayer’s ability to submit returns and pay VAT on time based on links to past businesses that had failed owing VAT. It issued a demand for a VAT security deposit for £29 450 under VATA 1994 Sch 11 para 4(2(a). This power is given to officers if they ‘think it is necessary for the protection of the revenue’.

However HMRC did not give the taxpayer any reasons for the demand and further the officer who issued the demand did not appear at the hearing to be cross-examined. Her letter to the taxpayer notifying it of the demand said there were ‘concerns that the company would be non-compliant’ with a mention of personal issues and the nature of trade and location of the business premises.

The First-tier Tribunal was very critical of HMRC. The judge said...