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	First-tier Tribunal (Tax)
You are here: BAILII >> Databases >> First-tier Tribunal (Tax) >> Lambert v Revenue & Customs [2009] UKFTT 208 (TC) (11 August 2009) URL: http://www.bailii.org/uk/cases/UKFTT/TC/2009/TC00161.html Cite as: [2009] UKFTT 208 (TC)

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[2009] UKFTT 208 (TC)

TC00161

Appeal number: EDN/09/34

Input tax recovery; no entitlement, assessment for repayment and interest paid; misdeclaration penalty mitigated by 55% appealed, appeal dismissed.

FIRST-TIER TRIBUNAL

TAX

A S LAMBERT Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S

REVENUE AND CUSTOMS (VAT) Respondents

TRIBUNAL JUDGE: Mrs G Pritchard, BL., MBA., WS

Sitting in public in Edinburgh on Monday 27 July 2009

No appearance for the Appellant

Mr Russell Harrison, instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1. This is an appeal against a mis-declaration penalty assessed in respect of an input tax recovery claim in the quarter 12/06 for a property purchase.
2. The Appellant wished the Tribunal to proceed on the written submissions he had made offering the excuse that he believed he had paid £7000 of VAT on the purchase of a property for which he paid £47,000. He believed the purchase price to be £40,000 with £7000 of VAT.
3. Mr Russell Harrison represented HMRC. There was a bundle of evidence Pp 1-35 a copy of which had been supplied to the Appellant.
4. From the evidence I find the following facts:

Alistair Scott Lambert is a Solicitor in Ayr. He purchased a basement in Cathcart Street, Ayr on which he reclaimed £7000 input tax recovery. He was unaware of the status of the property in relation to VAT. He has not produced evidence of an option to tax having been made. He did not obtain a VAT invoice or VAT receipt for the purchase price of £47,000.

Following a VAT inspection visit carried out on 27 May 2008 when this matter was raised with the Appellant verbally it was detailed in writing (Bundle P1) on 28 May 2008 when the Appellant was requested to produce further information specifically in relation to the £7000 of VAT purportedly paid to the sellers Mossie & Strathern. He also required to provide evidence of other compliance irregularities. It was pointed out that supply of property is usually an exempt supply, unless other conditions apply.

In response (Bundle P3) the Appellant advises he is making enquiries with regard to the status of the property.

To date, the Appellant has never provided the necessary evidence.

5. The assessment was raised with interest due which was paid.
6. The mis-declaration penalty was calculated in the sum of £1050. A 55% mitigation was allowed in terms of Customs Notice 700/42.

The Law

7. The law relating to mis-declaration is contained in VATA 1994 S63 Mitigation is provided for in S70 which specifically provides that the fact that a person acted in good faith shall not be taken into account.

Submissions

8. The Appellant submitted that he had understood the property price was £40,000 with £7000 of VAT, which he believed the seller had accounted for to HMRC. HMRC submitted the Appellant had not provided information or vouchers showing the division of the price. He is a Solicitor and as such must be aware of how seldom VAT is due on a purchase price of property. It was not unreasonable to expect a person of his education and standing to have obtained a proper VAT invoice to vouch such a large repayment claim. The penalty appealed had already been mitigated by 55% because the Appellant had co-operated, though not fully as he had not provided information requested. It had also been mitigated because the Appellant had answered some questions though had not managed to answer all. He took no other action to save HMRC money. He had other irregularities in his VAT returns.

Decision

9. No further mitigation is possible. The Appeal is dismissed.

Reasons

10. The provision of VATA 1994 and the Customs Notice 700 are clear.
11. Mr Lambert is a Solicitor who clearly is competent and able to identify an issue such as VAT on the purchase price of property. That alone should have triggered some enquiry as to why that was the position as it does not occur in many transactions involving a £40,000 basement in Ayr. HMRC themselves advise the Appellant that no option to tax had been exercised.
12. Mr Lambert could have provided more information more quickly in my view. There was therefore no ground to mitigate the penalty further. I leave it at 55%.

MRS G PRITCHARD, BL., MBA., WS

TRIBUNAL JUDGE

RELEASE DATE: 11 August 2009