Is a contract with HMRC worth the paper it is written on?
Poundland Case - a well trodden path ignored?
I was nearly at the end of a post on the Poundland case when it seemed to post itself. Whatever happened, I cannot find it.
If you do come across it, please let me know.
Looking at a case report provided by one of the professional libraries, two points hit me which were not discussed in the article: -
1 HMRC sought to walk away from an agreement because it may have been faulty from the outset or, maybe, because it had not given the result that they wanted when the scheme was closed. That was not the decision that the Tribunal came to, but it seems likely that it will be appealed further by HMRC. The point is that an agreement with HMRC is not something to be relied upon, which I find very sad indeed. But it isn't news.
2 It is well trodden ground that HMRC has a right to correct its own mistakes and is also within its power to seek to amend agreements. But these rights have responsibilities developed over the well trodden path. They must inform the taxpayer of what is wrong and why - the taxpayer cannot defend itself without this information. HMRC should seek to agree an amendment, but does not have to (it would be a mistake in my opinion as once again information which the taxpayer may need to defend itself may be withheld) - I should say here that I cannot recall in 46 years of working in VAT any occasion when HMRC offered up an error in an agreement which resulted in a ￡2m repayment to a taxpayer. I'd love to see examples, but back to this case. Where HMRC seeks to impose a new decision, whether or not HMRC was wrong in the past, it must do so from a prospective date (there will be exceptions, but most likely characterised by lack of disclosure or wrongdoing on the taxpayer's part). The details here show that an argument existed for a few years before HMRC imposed its decision. It is not clear whether it followed the trodden path or whether it just rode roughshod over the surrounding ground. The fact that this point was not mentioned in the case report I read indicates that either it was not a point that was taken, or that the writer of the article did not consider it to be important. It is.
We undertake a lot of dispute resolution work, and if you have a decision which you do not agree with, talk to us as we may well be able to help. Forensically examining a case for these nuances is a key part of our work. They're not always there, but frequently are.
www.covertax.co.uk
25 June 2021