Chartered Management Accountants and Consultancy Services for Small and Medium Sized Businesses

Beat The VAT Man

A Ramsbottom Chartered Management Accountant is celebrating after taking on the might of the VAT man - and winning!

Now, Mr. Kenneth Aldred stresses that his victory shows that Customs & Excise may not always be right.

Kenneth, whose Aldred Consultancy practice is based in Palmerston Close, explained that 18 months ago one of his clients was faced with a routine VAT inspection by a Customs & Excise Inspector.

He said: 'The client asked me to attend the inspection, to answer any queries that may arise. The Inspector noticed that an amount of VAT had been reclaimed on rent of business premises, six months prior the business becoming registered for VAT.'
'I informed him that this was in accordance with long standing VAT regulations that allow for VAT incurred on services, up to six months prior to registration, to be recovered - rent being classed as a service.'
He went on: 'The Inspector insisted that this was not correct, and that rent was classified as 'consumable service', a term which I had never heard.'

Mr. Aldred printed out the relevant VAT guidance from the Cusfoms & Excise website which made no mention of "consumable services" and the Inspector agreed not to make an immediate assessment.

The Ramsbottom businessman contacted an associate firm, VAT Solutions (UK) Ltd who specialise in VAT cases, who agreed with his interpretation of the rules and said they would take the case to a VAT tribunal.

Mr. Aldred continued: 'My client agreed that she was not prepared simply to accept the VAT Inspector's judgement and that on the advice of myself and in conjunction with Andrew Needham of VAT Solutions (UK) Ltd, she was prepared to pursue an appeal.'

But Customs & Excise still maintained VAT was not eligible to be reclaimed. The client would have to pay the VAT back, with interest, and they would contest any appeal.

At the VAT tribunal, Mr Aldred's client was represented by Nigel Gibbon, a Solicitor specialising in VAT law, along with Andrew Needham.

The tribunal found completely in favour of the Ramsbottom businessman's client and awarded all costs of the appeal against the Customs & Excise.

Following the decision, Mr. Aldred, who has been working for 20 years in Chartered Management Accountancy, said: 'The point is that Customs & Excise are not always right. While expert advice is always recommended, it is always worthwhile asking what is the basis of any decision.'
'It may well be the case that the Customs & Excise are wrong and a VAT registered business could be paying more VAT than is rightfully due.'

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