Tame the beast!

Taxpayer was victim of HMRC cock-up

Michael Griffiths (TC06697) was the victim of a PAYE foul-up by HMRC which resulted in his being served with a notice to file a self assessment tax return for 2013/14.

HMRC’s PAYE computer issued Griffiths with a tax calculation on 31 May 2014. Unfortunately, it only took into account one of his two employments and generated an overpayment of £579.80. A payable order was issued on 1 June, which he received on 3 June and duly banked.

Meanwhile, on 2 June, the computer issued a revised calculation which took account of all his income. Griffiths had, in fact, underpaid tax by 80p for the tax year (which would have been simple either to code out or to discharge). However, because of the payable order issue one day earlier the consequence was an “underpayment” of £581.60

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Input tax recovery

In an important judement delivered at the end of June the Court of Appeal (Civil Division) held that Input VAT could not be recovered in the absence of an invoice showing VAT had been charged.

The court ruled that ‘in the absence of a VAT invoice showing that VAT was charged to Zipvit by Royal Mail’, Zipvit could not recover any input tax (even if that input tax was ‘due and paid’). Although HMRC do have discretion to accept evidence which does not fully comply with the statutory requirements for a VAT invoice, the court found that there was no support in the legislation or case law ‘for the proposition that a right to deduct may be recognised and given effect without production of a VAT invoice showing that the tax in question has been paid by the supplier’.

Full story HERE