Waynefleet Limited v The Commissioners for HMRC
[2023] UKFTT 710 (TC)
ABA Motors Limited v The Commissioners for HMRC
3 May 2023
[2023] UKFTT 406 (TC)
First-tier Tribunal
A small car company couldn't pay a big tax bill because it had no money and couldn't borrow any. A judge believed them and let them fight the tax bill without paying first.
Key Facts
- •ABA Motors Limited appealed against HMRC assessments totaling £110,310 for VAT, claiming hardship.
- •HMRC denied the hardship application.
- •ABA's business model involved sourcing vehicles for Irish customers, resulting in zero-rated exports but VAT payable to UK dealers.
- •HMRC alleged missing trader fraud, leading to the assessments.
- •ABA provided limited financial information to HMRC initially.
- •ABA ceased trading after HMRC denied VAT repayment.
- •ABA is a small company with limited financial resources, and had borrowed from a related company, YBA Ltd.
- •YBA Ltd., owned by the same individual, also faces financial difficulties and cannot provide further funding to ABA.
Legal Principles
Hardship under section 84 VATA is determined by whether paying the VAT would cause hardship.
Section 84 Value Added Tax Act 1994
The tribunal should not consider the merits of the underlying appeal when assessing hardship.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
The hardship test is applied to the appellant's position at the date of the hearing, considering immediately available resources.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
The tribunal should consider all available evidence, including oral testimony, and make a value judgment.
NT ADA Limited v HMRC [2019] UKFTT 0333 and HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
Outcomes
The tribunal allowed ABA's hardship application.
The tribunal accepted the appellant's evidence of lack of funds and inability to obtain further funding, concluding that paying the VAT would cause hardship.