An export company made a careless error, not a deliberate one, in its VAT return, resulting in cancellation of £58,000 VAT penalty
The Upper Tribunal has overturned a decision by the First Tier Tribunal (FTT) and has upheld an appeal about VAT inaccuracy penalties totalling £58,340 related to a £98,820 VAT bill.
The ruling stated that the appellant, CPR Commercials Ltd, made a ‘careless’ error and not a ‘deliberate’ one on its returns by failing to obtain evidence of export before applying the zero rate.
HMRC argued that CPR had actual ‘blind-eye knowledge’ that the returns submitted contained inaccuracies, and had deliberately acted in error.
The appeal focused on the application of the definition of ‘deliberate’ using the Auxilium test from Auxilium Project Management Ltd v HMRC.
The Auxilium case found that ‘a deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with a document that contains an error with the intention that HMRC should rely upon it as an accurate document’.
D
