VAT deregistration denied, penalties upheld

In Jagvinder Takhar t/a Golden Fry v HMRC [2022] TC08593, the First Tier Tribunal (FTT) upheld HMRC’s VAT assessment and penalties for late registration as the unrepresented taxpayer had not satisfied HMRC that they were below the VAT registration limits.

• The appellant had operated a fish and chip shop since 2007.
• In 2012, HMRC noted the business was not VAT registered and carried out an unannounced visit to discuss his tax affairs.
• HMRC requested the appellant put additional checks in place to confirm takings.
• Further unannounced visits identified that orders were not being put through the till and were not otherwise recorded as sales.
• HMRC registered the appellant for VAT from 1 January 2009 and raised a Penalty.
• On 22 December 2014, the appellant submitted a VAT return, which was accepted, showing a liability of £45k.
• On 12 August 2015, the appellant sent an Error Correction Notice amending the liability to nil and included an application to Deregister for VAT from 1 January 2019 which was rejected due to an inappropriate date.

The FTT found that:

• The appellant was liable to be VAT registered from 1 January 2009.
• The appellant was not able to cancel their VAT registration retrospectively as:
  • The taxpayer had not satisfied HMRC they are not liable to be VAT registered.
  • HMRC, therefore, had no jurisdiction to cancel the registration retrospectively.
• The penalty was upheld as:
  • The penalty appeal was 26 months late.
  • Changing advisors did not represent a reasonable excuse for the delay.

Useful guides on this topic

Registering for VAT
When should a business register for and charge VAT? What are the VAT registration thresholds? What penalties might HMRC issue for late notification of registration? When do you need to file a VAT return?

Deregistration
When do I have to deregister for VAT? When can I voluntarily deregister? What penalties might HMRC issue if I am late notifying them of a mandatory deregistration?

Penalties (VAT)
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

Errors: VAT how to correct (freeview)
This is a guide to correcting VAT errors and mistakes. 

Correcting VAT errors
What are the VAT error correction time limits? Can you correct errors through the VAT return? Do you have to notify HMRC?

External links

Jagvinder Takhar t/a Golden Fry v HMRC [2022] TC08593