Partial exemption special method is puzzling

The tendency for HMRC to see problems with special methods proposed by taxpayers, where none exist, continues unabated, as shown by the First Tier Tribunal decision in Dynamic People (TC06345). The most puzzling aspect of HMRC’s case is that the method it refused is one it had accepted a few years before. The only change in the facts was that the method that had covered the single company had had to be re-applied for when the company formed a group registration. The other group members were dormant and the supplies made by the group were identical to those made by the single company prior to the group.

The facts seem unusual in that inclusion of dormant companies in group registrations rarely arises. However, the same essential position would apply if, say, the activities of a single company were split between several commonly controlled companies which were then included in a group registration. In that case the group would also carry out identical activities to those of the preceding single company.