This case came to us several years ago from another firm of accountants. It involved a take away/ restaurant being under investigation by HMRC’s VAT team and assessments being raised. We challenged the assessments as being unreasonable putting forward our strong technical arguments. Unfortunately, HMRC inspector was not willing to accept and we had to appeal to the Tribunal. Shortly before the Tribunal hearing and whilst exchanging statement of case, HMRC’s litigation office wrote to us to state that they will be settling the appeal by agreement. We are grateful to the HMRC’s Solicitor’s Office for having critically reviewed the case before the hearing and deciding that it was not worth pursuing. This victory was great news for our client who had been under stress for a long period. Please click here to view HMRC’s letter settling the Tribunal case by agreement.

Our analysis: This was an interesting case where HMRC had taken a strong stance on their technical position. We have come across a number of such cases previously and have experienced that either the client or their accountant give in to HMRC’s position to avoid going to Tribunal. We have written on numerous occasions previously that just because an HMRC’s inspector takes a particular view does not mean it is necessarily correct according to the legislation and case law. In this case, our technical arguments were very strong but the HMRC caseworker was not willing to consider. Finally prior to the hearing at the Tribunal when the case was reviewed by HMRC’s litigation office, they accepted our position and settled by agreement. This case once again demonstrates the importance of seeking specialist advice from a reputed firm when under a tax investigation.