This week's opinion: 25 February 2021

How much help should we give our clients? I learned early in my career that you need to be very careful. First, it’s difficult to get paid for giving advice which was not asked for, even if the advice is good. But second, you and your client may not have same view about what advice has been given. If I say ‘It’s not my area of expertise but I think that you might be able to claim relief for that’, a client can easily hear ‘you will get relief for that’ and then threaten to sue you if it is not available. I was taught ‘either you are giving advice, or you are not – there is no halfway house’. 

HMRC has the same problem – as the Westow Cricket Club case shows all too vividly. The club asked HMRC for a ruling on the VAT treatment of its new pavilion. HMRC said it was not its policy to give a definitive response on matters covered in guidance. Had it left it there the answer might not have been welcome, but at least the club knew that it would have to look elsewhere for advice. But HMRC, no doubt with the very best of motives, pointed the club towards various VAT notices dealing with the issue. Unfortunately, the club failed to appreciate the subtleties of what these said and got the VAT wrong, resulting in a penalty of nearly £21,000. The Upper Tribunal cancelled the penalty, on the grounds that the club had a reasonable excuse for not seeking further advice. 

HMRC is between a rock and a hard place here. We want it to help taxpayers and yet we also recognise that definitive rulings on complex issues are costly and time consuming. The Upper Tribunal went out of its way to say that it hoped that HMRC would not decline to answer taxpayers’ queries in future, but I fear that may be the outcome. Let’s hope HMRC can find a way of squaring that circle.