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The taxpayer company registered in 2009 to use the VAT flat rate scheme. The taxpayer’s adviser wrote to HMRC asking to have the business's registration backdated to 2005 because it would result in a VAT repayment of approximately £17 735.

The Revenue refused to allow retrospective registration saying it would be possible only where an alternative calculation of the tax due has not already been submitted or in exceptional circumstances; for example if the company had been misdirected by an HMRC officer or if the company was under threat.

Neither situation applied to the taxpayer and the fact the business had corporation tax to pay did not constitute hardship.

The First-tier Tribunal said the taxman was applying a rational policy ‘designed to provide a consistent approach to the exercise of a discretion’.

The taxpayer’s appeal was dismissed.

Independent VAT consultant Neil Warren said ...