CTM Success in VAT Security Appeal
CTM Success in VAT Security Appeal
CTM secured a Tribunal victory on behalf of a Mexican restaurant that had been issued a VAT Security Notice due to prior VAT arrears. The appeal was lodged in 2018, and the outcome has important implications for other businesses facing similar notices.
The judge ruled in favour of our client on all three arguments presented:
1. The Notice was unlawful because it did not contain reasons. HMRC is required to explain the basis on which a VAT Security Notice is issued, and the notice served on our client failed to include any such explanation. This alone was sufficient to render the notice invalid.
2. The Notice did not allow the client to present information about future trading. Our client had undergone significant changes since the period of the arrears, and HMRC had not given them any opportunity to demonstrate that their future trading position was different from the past.
3. HMRC should have issued a pre-Notice letter. Before imposing a VAT Security Notice, HMRC ought to write to the business first, giving them a chance to respond. In this case, no such letter was sent.
Despite this judgment, all VAT Security Notices still being issued by HMRC continue to lack proper reasons. Traders are rarely given the opportunity to explain changed circumstances before a notice is imposed. Businesses that receive a VAT Security Notice should seek advice promptly, as there may be strong grounds for appeal.
Frequently asked questions
Can you appeal a VAT Security Notice?
Yes. CTM secured a Tribunal victory for a Mexican restaurant that had been issued a VAT Security Notice due to prior VAT arrears, with the judge ruling in the client's favour on all three arguments presented. Businesses that receive a notice should seek advice promptly, as there may be strong grounds for appeal.
Does HMRC have to give reasons for a VAT Security Notice?
In this case the Tribunal found the notice unlawful because it did not contain reasons. HMRC is required to explain the basis on which a VAT Security Notice is issued, and the failure to include any such explanation was alone sufficient to render the notice invalid.
Should HMRC write to a business before issuing a VAT Security Notice?
The judge accepted that HMRC should have issued a pre-Notice letter. Before imposing a VAT Security Notice, HMRC ought to write to the business first and give it a chance to respond. In this case no such letter was sent, and the business had no opportunity to show that its future trading position differed from the past.
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