In Simon Coates v HMRC [2015] TC04628 the first tier tribunal (FTT) agreed that the appellant had taken reasonable care when he signed an inaccurate form presented by his accountant.
Background:
Mr Coates submitted a claim for a VAT refund under the DIY New Housebuilders scheme.
HMRC rejected part of the claim as some of the supplier invoices included VAT which should not have been charged.
HMRC charged a 15% penalty, the minimum available for a careless inaccuracy and a prompted disclosure, and refused to suspend the penalty.
Mr Coates' representatives advised HMRC that the error was due to their administrative error; they had unintentionally forwarded an early, incorrect version of the claim form to Mr Coates for signature rather than a corrected, later version.
HMRC stated that as Mr Coates was the director of a construction company, he should have an understanding of the VAT issues involved, and should therefore have realised that the form was incorrect.
In fact, his company was a subcontractor involved in paving and surfacing, and invoiced all works at a standard rate.
Tribunal decision
In concluding that Mr Coates had taken 'reasonable care to avoid inaccuracy' such that no penalties were due, the FTT stated that:
- Mr Coates had no previous experience of DIY scheme claims
- Mr Coates was not familiar with the principles applied by HMRC to these claims
- He put the matter in the hands of his accountants and supplied all the information they needed to complete the form
- He signed the form placed before him by his accountant, neither of them realising it was inaccurate
- He believed the form to be accurate, that belief was reasonable, and he signed the form in that belief
