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The taxpayer applied to join the VAT flat rate scheme (FRS) in August 2017 asking for the application date to be backdated to the VAT period starting 1 January 2017. HMRC refused because the March and June 2017 returns had been submitted so it was not possible for the time saving benefits to be enjoyed for those periods. HMRC allowed a starting date of 1 July 2017.
The company was unprofitable and backdating the scheme by six months would have saved VAT of £2 023. The taxpayer claimed this was crucial to the survival of the business and thus an exceptional circumstance to justify backdating. The windfall was evident because the 4% flat rate percentage for retailing food and confectionery produced a favourable outcome.
The First-tier Tribunal saw no reason why the backdating should be allowed – the £2 023 windfall was not a make-or-break receipt for the business....
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