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In Michael Robinson v HMRC [2020] TC7951, First Tier Tribunal (FTT) dismissed the penalties on Mr Robinson for his continued use of cash accounting basis after the withdrawal of cash basis on the grounds that this was not a deliberate behaviour.  

Mr Robinson was a director of PMR Limited (PMR) and two other related companies. PMR provided project management services to the related entities.

PMR used the Cash accounting basis for VAT as it was within the threshold for the cash basis and expected to remain so. The related entities used normal invoice accounting method.

In April 2014, HMRC commenced an enquiry as there was a disparity between the output VAT declared by PMR and the input VAT reclaimed by the related companies.

Useful guides on this topic

Cash accounting
Under cash accounting instead of accounting for VAT on an invoice basis, you reclaim input VAT on amounts actually paid to suppliers and pay over output VAT on amounts actually received from customers.

Cash or accruals accounting toolkit
Since April 2013, unincorporated businesses can elect to use one of two different methods of accounting for tax: simpler accounting (cash basis) or accruals basis accounting.

How to appeal an HMRC decision  
What type of decision can you appeal? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Michael Robinson v HMRC [2020] TC7951