In Faux Properties (A Partnership) v HMRC [2019] TC7051 a partnership's failure to adjust their VAT return to declare VAT received on the sale of an opted property resulted in a penalty for carelessness.

  • The Appellant owned a commercial property in Warrington ('the Property').
  • On the same day that it registered for VAT, it opted to tax the Property allowing it to reclaim VAT spent on refurbishments, it meant it was obliged to charge VAT if and when the Property came to be sold.
  • On 20 March 2015, the Appellant sold the Property for £202,800 including £33,800 VAT and issued a VAT-only invoice to its purchaser.
  • The Appellant failed to add the VAT to its return and filed a 'nil' return for the period.
  • HMRC investigated and calculated a tax-grear Penalty for inaccuracy under Schedule 24 FA2007 on the return on the basis that the omission was deliberate as £33,800 x 44.5% = £15,379.
  • The Appellant appealed the penalty to the First Tier Tribunal.

One partner gave evidence for the appellant: he claimed that he did not understand VAT electronic filing, he was uncertain who had issued a VAT invoice and he had been ill. 

The FTT accepted his illness however it did not accept that the partnership could not have delegated the task of filing the VAT return to someone else and considered that his behaviour was careless.

The FTT confirmed a penalty was due however it used its powers to request that HMRC make a reduction to reduce the penalty from deliberate to careless.


If you are stuck with your VAT don't ignore the problem: either seek assistance from an accountant or call HMRC's VAT helpline. Always tak

Useful guides

VAT: option to tax commercial property

Correcting VAT errors

Penalties (VAT)

Penalties: Errors in Returns and Documents 

External links

Faux Properties (A Partnership) v HMRC [2019] TC7051