Company denied use of the flat rate scheme

The appeal related to many issues about the use of mini-umbrella companies (MUCs) one of which was HMRC’s decision to withdraw the lead appellant retrospectively from the flat rate scheme (FRS). This was on the basis that it was for the ‘protection of the revenue.’

The First-tier Tribunal considered the FRS case of Mark Saggers Media Ltd (TC2815) where the director decided that the company should remain in the scheme - despite breaching the exit turnover thresholds - on the basis that he expected the company’s sales would reduce in the following year. However new contracts meant that sales increased so HMRC withdrew the company from the scheme anyway. The tribunal supported HMRC’s decision in the Saggers appeal.

In the instant case the tribunal noted that its powers to overturn HMRC’s decision were limited to situations where HMRC had acted unreasonably.

The taxpayers claimed that HMRC...