Wrong flat rate percentages and default surcharges

The director operated as a sole trader from 2008. She registered for the flat rate scheme and used the rate for ‘business services not listed elsewhere’ which at the time was 9% reduced to 8% in her first year of VAT registration. In January 2014 she incorporated her business and again used the 8% rate. 

However because of VAT standard rate changes – from 15% in 2009 to 20% in 2011 – she should have adopted the rate of 11% in her first year as a company and then 12%. HMRC raised an assessment for £3 359 which the director appealed on the basis that it should have told her about the increased rates. She also blamed her accountant for failing to identify the error. The First-tier Tribunal said HMRC was under no duty to inform a trader individually the percentage used was incorrect and confirmed the...