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Disregard for the facts

25 October 2012
Issue: 4377 / Categories: Tax cases , VAT
AML Consulting (TC2151)

After being made redundant the taxpayer set up a management services company. She registered for VAT and applied to join the flat rate scheme in the management consultancy sector which attracted VAT at 12.5%.

The taxpayer later realised she was listed in the wrong sector and should have opted for “business services not listed elsewhere” which had a rate of 11%.

She informed HMRC and sent a voluntary disclosure form to claim repayment of overpaid VAT for the periods in which the tax had been paid at the management consultancy rate.

A VAT officer agreed to the revised rate but said no claims could be accepted for past overpayments because the flat rate scheme was self assessing. It was therefore the taxpayer’s responsibility to get it right.

The taxpayer appealed.

The First-tier Tribunal said the taxpayer’s original choice of sector for the flat rate scheme was reasonable...

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