Challenging HMRC assessments

22 July 2020

Liaison Financial

The outcome of a recent case that Liaison Financial took on behalf of one of our clients demonstrates the benefit of using our wealth of experience and robustly challenging HMRC’s decisions.

HMRC decided that the trust in question had claimed £1.6 million COS input VAT in error. HMRC issued a demand for repayment of that amount plus interest £330,000.

The dispute concerned various services supplied under a single contract by the same supplier. HMRC held to their default stance that a single contract equated to a single supply and as such, the services fell outside the scope of any single COS heading.

Liaison Financial was confident that HMRC was incorrect and that on proper analysis, the contract comprised several different services each of which was recoverable under individual COS headings. Liaison Financial submitted an appeal to the Tax Tribunal on behalf of our client and following further scrutiny by HMRC’s litigation team of Liaison Financial’s technical arguments, they overturned their decision without the need to progress to a tribunal hearing.

Without Liaison Financial’s expert intervention it is likely that HMRC would have succeeded. The NHS trust in question would not only have been unfairly penalised for £1.6m but also lost the ability to recover VAT on future suppliers that would have run to several million.