ABA Motors Limited v The Commissioners for HMRC
[2023] UKFTT 406 (TC)
Waynefleet Limited v The Commissioners for HMRC
8 August 2023
[2023] UKFTT 710 (TC)
First-tier Tribunal
A company owed a lot of money in VAT. They couldn't afford to pay it without going bankrupt, so a judge said they didn't have to pay it right away. The judge looked at how much money the company had and decided that paying the tax would cause too much hardship.
Key Facts
- •Waynefleet Limited appealed against a VAT assessment of £170,344.78.
- •HMRC denied the appellant's hardship application.
- •The appellant's principal business activities include journalism, writing, business and project management, marketing consultancy, and game shooting.
- •The VAT assessment related to the supply of pheasant shooting deemed a commercial activity.
- •The appellant argued that paying the VAT would render the business inoperable.
- •At the hearing, the appellant had minimal funds in its bank accounts.
- •The appellant provided recent accounts showing net liabilities and trading losses.
Legal Principles
Hardship in VAT appeals; balancing act between preventing abuse of appeals process and ensuring fair access to appeals.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
Hardship test is 'all or nothing'; ability to pay part of the sum is irrelevant.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
Test applied to appellant's position at the hearing date; future resources not considered.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
Existence of readily available resources does not negate hardship if using them would cause hardship.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC) and Seymour Limousines Limited v Revenue and Customs Commissioners [2009] UKVAT V20966
Burden of proof to establish hardship lies with the appellant.
HMRC v Elbrook (Cash & Carry) Limited [2017] UKUT 181 (TCC)
Outcomes
The Tribunal allowed the appellant's hardship application.
The appellant had no immediately or readily available resources to pay the VAT assessment; paying the VAT would cause hardship.