10


Four and a half out of ten


Do you think H M Revenue & Customs always get their VAT decisions correct? Unlikely of course, as nobody is perfect. How about most of the time then? More often than not even?


Mark Peters,


Associate Director, VAT


Shockingly it would appear that the correct answer is actually ‘sometimes’. Data recently obtained under the Freedom of Information Act confirms that during the last year and a half 56% of all penalty and technical decisions issued by H M Revenue & Customs were wrong. Out of 28,912 reviews undertaken, 16,270 were overturned, either by the Courts or by H M Revenue & Customs themselves.


The position is worst with penalties and fines, of which 60% were eventually cancelled (for technical decisions ‘only’ 48% proved to be wrong). This may not represent the complete picture as many taxpayers don’t challenge decisions at all, either because they don’t have the time or resources, or because they mistakenly assume they will be unsuccessful. If VAT officers were schoolchildren they’d be getting marks of four and a half out of ten for accuracy.


So why are H M Revenue & Customs getting it wrong so often? Partly this may stem from the state of nation’s finances. The Treasury is desperate for cash and officers are being encouraged to raise assessments or issue penalties in borderline cases. But it isn’t all down to officers taking a flyer. Poor training also seems to be playing a part, which is particularly galling due to the complexity of this ‘self assessed’ tax which taxpayers are expected to get right by themselves.


Other factors playing a part include the lack of sanction against officers raising incorrect assessments. No officer consistently making mistakes in favour of H M Revenue & Customs will ever be held to account, quite the opposite in fact. And with the Tribunal Appeal goalposts having recently moved in their favour, neither do H M Revenue & Customs, at least insofar as litigation costs are concerned.


For taxpayers, the message is clear. If you get a penalty, or are assessed for underpaid tax, don’t just accept it. Consider challenging H M Revenue & Customs, for as these statistics show, your chances of winning seem to be better than 50/50.


For more information on VAT, please contact Mark Peters on 01392 280340.


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