In Peter Hartigan T/A Striking Iron Ltd [2019] TC7109 a trader who claimed to misunderstand the VAT registration rules received a £30,000 penalty for his failure to notify.

  • Mr. Hartigan traded as a sole-proprietor since 2005-06.
  • His self-assessment returns for 2012/13 and 2013/14 showed his turnover to have breached the VAT registration threshold.
  • When asked of his understanding of VAT, Mr. Hartigan said he believed VAT was to be taken into account when profit (not turnover) is over a certain threshold and that he had relied on his accountant to advise on such matters.
  • HMRC then carried out a check into his VAT registration position, and an Effective Date of Registration was established to be 1 December 2012, based on the breach being at the end of October 2012.
  • A VAT assessment was raised based on HMRC’s best estimates due to inadequate information from the appellant.
  • HMRC issued a penalty for Failure to Notify on the basis that the disclosure was prompted, and the behaviour leading to the failure was deliberate.
  • The VAT Flat Rate Scheme percentage for the trade sector at 9.5% was used to allow for the input VAT on purchases and expenses and to work out the HMRC’s Potential Lost Revenue.

Mr. Hartigan disputed the VAT assessment and penalty decision on the grounds that he had relied on an accountant to advise on such matters and that his business would not survive if the VAT assessment and the penalty of nearly £30,000 were to be upheld.

The FTT dismissed the appeal.

  • It found that the accountant had advised his client about VAT and it had been ignored.
  • The VAT assessment and penalty assessment were upheld subject to some minor arithmetic error corrections to the penalty assessments.


A case like this raises issues for tax agents, there is a lot of guidance: see Professional Conduct in Relation to Taxation.

Useful guides on this topic

Registering for VAT

How to Appeal a Tax Penalty

Penalties (VAT)

Grounds for Appeal: Toolkit

Grounds for appeal: reasonable excuse

External links

Peter Hartigan T/A Striking Iron Ltd [2019] TC7109