Effect of registration cancellation

The taxpayer an employment business sought judicial review of HMRC's decision to cancel its VAT registration. HMRC had done this because it had concerns the company was ‘principally or solely registered to abuse the VAT system by facilitating VAT fraud’.

The taxpayer said the effect of the cancellation was that it could not reclaim input tax and would therefore have to increase its prices by about 20% to maintain its margins. It said this was not realistic in the current market. Although it had lodged an appeal with the First-tier Tribunal the taxpayer sough judicial review because it was concerned the tribunal hearing would not take place for some time. It hoped that the review would restore its VAT registration pending resolution of the issues with the taxpayer protesting that it would become insolvent if it failed to obtain interim relief before the hearing.

The High...