In Dorset Trimming Company v HMRC [2019] UKFTT708 TC07480, the First Tier Tribunal (FTT) dismissed the appellant’s argument that HRMC’s interpretation of registration rules as incorrect and that it was not obliged to register for VAT.

HMRC argued that the company exceeded the VAT registration threshold in February 2011 and again in July 2015. It should have been registered for VAT from October 2011 to December 2011 and from 1 September 2015 to July 2016.
The Company agreed to settle the VAT due in respect of the October 2011 to December 2011 period amounting to £1,230.52.

Both parties agreed that the 12-month rolling turnover to July 2015 exceeded the VAT threshold and accordingly the company was required to register for VAT on 1 September 2015, i.e. effective date of registration. Dorset Trimming’s cumulative 12-month turnover from 1 July 2015 exceeded the VAT threshold, but its cumulative 12-month turnover from 1 September 2015 did not. The company contested the VAT due for September 2015 to July 2016 on the basis that the 12-month rolling period VAT registration test starts from 1 September 2015.

HMRC argued that Dorset Trimming became “liable to register” at the date when the threshold was breached, July 2015 and not on the date of registration, September 2015. HRMC added that the two-month grace period between the VAT threshold being reached and registration date was just a concession operated by HMRC reflecting the fact that it was not practical for entities to immediately register for VAT.

Dorset Trimming appealed to the FTT.

The FTT confirmed that the 12-month rolling period VAT registration test is applied from the date on which the VAT threshold was breached rather than on the registration date, as Dorset had argued.

The FTT criticized the wording of the HMRC’s manual, which it considered could be interpreted in the way that the company suggested.

The Dorset Trimming appeal was dismissed.

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Dorset Trimming Company v HMRC [2019]

 

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