Effective date of registration

HMRC found that the taxpayer should have been VAT registered after checking his 2014-15 self-assessment tax return. This showed taxable sales of £93 274 – above the £81 000 registration threshold that applied at the time. His registration was backdated to July 2014 with arrears of £8 323 and a 20% penalty of £1 664. 

The taxpayer’s accountant put forward several reasons why the tax and penalty should be withdrawn including hardship blame culture lack of advice from HMRC about when to register and the taxpayer’s ignorance of the law. He claimed the taxpayer should be granted an exception to being registered because of a ‘one off’ good job in May 2014. 

The First-tier Tribunal supported HMRC in rejecting all the excuses. However the judge decided the taxpayer’s registration should be backdated to October 2014. This was because the ‘somewhat perverse effect of [the agent’s] intervention’. The...