Related Links

BrassTax news

HMRC fail MOT Test

The recent tribunal case of Martin Jamieson Motor Repairs (V20269) is a wonderful breath of fresh air and common sense which almost restores one's faith in the tax system (though not sadly in HMRC). The decision (it's not long) is worth reading in full just because its whole tone cheers up the day: but essentially it is about the circumstances in which a trader (in this case a small garage taking cars for MOT tests) can treat expenses as VAT-free disbursements.

The trader represented himself and it can have done no harm to his cause that the tribunal found him to be a "transparently honest man who had been trying to deal correctly with his VAT affairs. "It is plain that as a result the tribunal was bending over backwards to come to the right decision and it had refreshingly little time for pedantic and legalistic contentions put forward by HMRC which it found variously "totally unrealistic", "fanciful", "quite extraordinary" and “stunning”; and it savaged HMRC guidance as "extremely confusing at best, or otherwise just wrong".

There are at least two points for advisers to pick up from the case. The first is the need to try to avoid the problem in the first place by ensuring that HMRC's detailed invoicing requirement for disbursements are met. It is quite evident that HMRC focussed far too much on the form of the invoices and far too little on what was actually the legal position: a minor change to the invoicing would apparently have prevented the case ever coming before the Tribunal. The second point is that advisers may want to consider that in appropriate cases the right strategy may simply be to let your client speak for himself before a VAT tribunal or other appeal body: the blunt honesty of horny-handed sons of toil and rude mechanicals may (as in this case) be rather more appealing to an appeal body than the bland legalistic assertions of faceless civil servants or even, we dare say, the silver-tongued persuasiveness of slick tax advisers. Long may it be so.