The Tribunal, The VAT Officer and those pesky TOGCs
I recently read a summary of a VAT Tribunal case where the chairman criticised the VAT Officer’s understanding of VAT caselaw. The case itself concerned one of the most difficult and subjective areas of VAT, ie transfers of going concerns (“TOGCs”). The officer had quoted a particular case in correspondence with the taxpayer in support of HMRC’s position, which was overturned by the Tribunal. The chairman made the observation that the officer, when under cross-examination about the caselaw he had quoted, “had no idea what the case was about”.
Now you’d expect a VAT consultant to be on the side of the taxpayer and applaud the Tribunal’s criticism of the officer’s lack of knowledge about the subject. But I actually find myself somewhat embarrassed by this criticism, because as an ex VAT officer, I recall that officers often have to rely on guidance from HMRC head office departments or internal guidance – which can be misunderstood or limited to one very narrow viewpoint. Very few officers have extensive knowledge of or access to VAT caselaw - their job as compliance officers requires another skillset entirely. If anyone was to blame for an officer’s error in quoting caselaw during a Tribunal, the fault has surely to lie with the legal experts in HMRC’s Solicitors’ Office who should have spotted the incorrect reference before the case ever got to the Tribunal.
But there are hundreds of cases about different aspects of the subject and there are so many different issues to consider that we all should have to take time to consider whether business sales are TOGCs. In the case concerned, HMRC was in the wrong – not just because of the incorrect reference to caselaw – but because their officers had given an incorrect ruling in what should have been a relatively straightforward case. And this is what concerns me; that businesses rely on incorrect rulings given by VAT officers, many of whom can’t be expected to have sufficient knowledge of the legislation and caselaw to be right. So if you think that a ruling might be wrong, please don’t be afraid to challenge it, especially if it means that you or your client have to pay additional VAT.
Just over £1200 in total Mrs!
My little old car has got me through a lot of miles and significant life events since I purchased it in 2002. I know I need a new one, but I’m just hoping I can get another 6 months or so out of it before I have to take the plunge. This month I had budgetted around £750 for a service, new tyres, battery and a couple of small repairs. The garage originally quoted just under £500 for the whole lot so I hoped that I’d given myself plenty of wiggle room in case of any other stuff that came up during the service.
So there I was this morning not surprised by the fact that the car needed some more work, but when the young lady told me that the total would in fact be over £1200, well I nearly had to scrape myself off the wall. There is a point in the life of every car when it starts hemoraging money and the cost of repairs is more than the car is worth. Until last September, my little Renault Megane Cabriolet had been so reliable and apart from the occasion brake disc or new tyres, hardly cost anything to keep on the road. I guess seven and a half years is pretty good going really, but I’ll really have to retire her sometime soon. I’m not normally sentimental about cars but this one has been my reliable friend since 2002 and I’ll be sad to see her go.
Hope you all have a good weekend and safe journeys wherever you’re going
Marie