The First-tier Tribunal has refused an application by HMRC to have an appeal against its decision to change the effective date of VAT registration struck out (Phu Hung Ltd v HMRC [2023] UKFTT 224 (TC)).
The appellant had originally registered for VAT with an effective date of 1 May 2019, but HMRC had changed this to 1 July 2017. The appellant had appealed against this decision and HMRC were seeking to strike out this appeal.
HMRC had already made two unsuccessful applications, first for the appeal to be struck out on the basis that the tax had not been paid and hardship had not been established, and then for additional grounds of appeal to be provided by the appellant. For this third attempt HMRC set out their contentions as to why they were right to change the effective date of registration and argued that the appellant had kept insufficient records and had not provided any supporting evidence. Furthermore, HMRC argued that even if the appellant’s own figures were correct, the effective date of registration should be changed to February 2018.
The tribunal judge noted that the onus was on HMRC to demonstrate, on the balance of probabilities, that the appellant’s case or part of it had no reasonable prospect of success.
In considering this matter she noted with regards to HMRC’s contention that there was a lack of evidence that:
“at this early stage of proceedings, the Tribunal (and the Respondents) simply cannot know what evidence the Appellant will present. In the circumstances I am not persuaded that the Appellant’s lack of evidence, at a stage prior to any evidence being required, demonstrates that the Appellant does not have a realistic prospect of being successful in this appeal. I am not persuaded that this is an appeal that is not fit for a full hearing.”
With regards to HMRC’s contention that the appellant’s evidence to date suggested that the registration date should be 1 February 2018 she noted that:
“even if it were not the case that the Appellant’s figures for its turnover support its choice of 1 May 2019 as the effective date of registration, the decision that the Respondents are defending is a decision to change the Appellant’s effective date of registration to 1 July 2017, some seven months earlier than 1 February 2018. So, even if the Respondents were correct to argue that the Appellant could only succeed to the extent of establishing that the effective date of registration was 1 February 2018, that alone would be sufficiently good reason for me not to exercise my discretion to strike out this appeal.”
The judge concluded:
“In the circumstances, the Respondents have not demonstrated on the balance of probabilities that the Appellant does not have a reasonable chance of success in this appeal. … The Respondents’ application for this appeal to be struck out is dismissed.”
http://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08745.html
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