Supplies were VATable, but assessment was out of time
HMRC is notoriously strict on taxpayer deadlines, e.g. when making claims for tax relief. However, it must also follow the rules. In a recent tribunal case, HMRC was told it was too late to collect underpaid VAT of nearly £250,000. What went wrong?
The taxpayer (GG) is a registered nurse, qualified as a prescriber, and sold treatments for skin disorders, mainly ultraviolet. She had exceeded the compulsory registration threshold, but did not register as she believed the treatments were exempt as “medical care”. HMRC disagreed and said they should be standard-rated as the treatments were largely cosmetic. The tribunal agreed with HMRC on balance, and said that the supplies from November 2007 to February 2018 should have been subject to VAT at the standard rate. HMRC had raised an assessment for £212,897.
The problem for HMRC was that it had issued the assessment in March 2021, and the timeframe under s.73 VAT Act 1994 only allows twelve months from the end of the relevant period in these circumstances, namely after sufficient evidence of facts to determine the VAT due are obtained by the officer. HMRC had argued that the submission of a VAT return by GG meant new information, and therefore a later deadline, but the tribunal dismissed this as it was a nil return. The case is a reminder to always check assessments for any tax have been correctly issued within the relevant time limits.
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