HMRC Not Playing by the Rules

23 March 2015

HMRC are putting small businesses and their advisers in a very difficult position when it comes to how they interpret VAT decisions by the Courts and changes instigated by parliament and the EU, claims a new white paper by Wolters Kluwer’s UK CCH VAT expert, Glyn Edwards.

The white paper examines three highly complex and contentious VAT areas: MOSS, the Flat-Rate Scheme and Property Conversions, to reveal how HMRC are sidestepping the law for their own gains.

Take the recent changes to MOSS. Despite offering a seemingly last-minute helpful solution for SMEs regarding VAT registration, HMRC have implemented a system without any change in law, leaving SMEs at the mercy of HMRC’s administrative practice.

For example, a small online business forced to register for VAT to comply with rules on digital download sales may find it has no right of appeal if it temporarily goes above the VAT threshold. Making firms that sell downloads outside the UK register for VAT, however small their sales, denies them the right to appeal to a Tribunal.

Glyn Edwards, Senior VAT Consultant at Wolters Kluwer says: “HMRC expect taxpayers to play by the rules with penalties for those that don’t. Businesses expect the same from HMRC, but the department sometimes behaves as if the law only applies against taxpayers and should not prevent them collecting as much tax as they possibly can.”

A copy of the white paper The Twilight World of Lawless VAT is available to download free of charge from the CCH website.

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