Protective claim made too late

The taxpayer was a wholesale supplier of e-cigarettes. One of its customers said the taxpayer should make a protective claim to HMRC (error correction notice (ECN)) for VAT paid at 20% on e-cigarettes in the four-year period up to October 2018 on the basis that the customer was appealing the decision that VAT should be charged at 5% instead.

The taxpayer submitted the ECN on 29 October 2018 for £273 000. HMRC rejected it in a letter dated 10 December 2018 instructing the taxpayer to appeal to the First-tier Tribunal if it wanted to stand behind a lead case on the VAT rate for e-cigarettes. The director claimed that the letter was never received so no action was taken to appeal to the tribunal. The director assumed that the £273 000 claim was held on file on HMRC’s computer and would be refunded if litigation eventually supported...