Gregory Sewell v HMRC [2023] T9269 is a cautionary tale. A taxpayer's appeal against HMRC’s decision to refuse a VAT refund was not drafted in any way that allowed the FTT to review HMRC's decision. His lack of knowledge of the appeals process led to his appeal being denied.
- The taxpayer constructed a static caravan and sought HMRC’s advice by telephone.
- HMRC’s adviser gave the wrong advice, leading Mr Sewell to think he had a valid claim under the VAT DIY housebuilder scheme.
- Thinking he was entitled to zero rates on the relevant costs and so qualify for a refund, he re-claimed £16,094 in VAT.
- HMRC then denied relief because the DIY Builders’ refund scheme does not apply to caravans.
The taxpayer appealed to the FTT.
- According to the FTT, Mr Sewell’s grounds of appeal related "to matters appropriate to a complaint or, at its highest, breach of a legitimate expectation created by the information given to the appellant during the telephone call”.
- It is well-established that the correct way for a taxpayer to appeal misleading advice by HMRC is through the judicial review process.
The FTT has no power to make a judicial review.
The case was dismissed.
But…
The FTT also noted that HMRC’s decision could perhaps be capable of a proper challenge on the basis of its ruling applied to the facts of the case.
Wannbe DIY Builders (and their advisers) may note there were several inconsistencies between HMRC’s arguments and how the VAT legislation could be applied to the construction of a static caravan that is perhaps actually a building.
The taxpayer could seek advice whether there is any angle to consider a further to pursue late appeal on a technical basis, that might challenge HMRC's interpretation. Whether the FTT would entertain that or not, is something that only it could decide, otherwise HMRC's misleading advice is one for judicial review.
Useful guides on this topic
How to appeal a decision of HMRC
Disagree with an HMRC decision? How do you appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
VAT: DIY Housebuilders Scheme
It is possible to recover VAT on constructing a new residential dwelling, or dwellings, even where there is no planned sale of the property. This recovery can arise under the special refund scheme for DIY housebuilders.
Campsites & Caravans: Tax Overview
What expenses can campsite owners claim for tax purposes? How is income taxed? Are there special tax and accounting rules when land is used for camping on a seasonal basis? What are the rules for caravans and campervans? What are the VAT rules?
How to appeal a tax penalty
How do you appeal against a tax penalty? What are your rights of appeal if HM Revenue & Customs (HMRC) have assessed you for a tax penalty?
External links
Gregory Sewell v HMRC [2023] T9269
