HMRC have been directed by the First-tier tribunal – in the case of Forth Wines Limited (Formerly Dollar Trade Ltd) (TC01770) – to reconsider the refusal to allow use of the Simplified Import VAT Accounting Scheme (SIVA) and the Excise Payment Security System Scheme (EPSS).
HMRC had refused the continued use of SIVA and EPSS by the transferee in a business which was transferred as a going concern.
The tribunal commented that consideration should be given to the actual risk to the payment of deferred liability for import VAT and excise duty, in the light of:
- the appellant’s financial circumstances;
- the fact that the business being carried on is managed on a day-to-day basis by the same management team which carried on the day-to-day operations of the old business;
- the fact that the old business’s compliance record was good; and
- the compliance record of the business since the transfer of the business took place.
The tribunal stated:
“We are satisfied that the decision in relation to the SIVA application and the decision in relation to the EPSS application are decisions which the Commissioners could not reasonably have arrived at and therefore must cease to have effect. We direct that the Commissioners conduct a further review of the original decisions each review to be carried out by an official or officials not previously involved in the processing of the underlying applications or in any stage of the decision making process. It may be convenient for the same official to carry out both reviews but we do not direct that this must be done.”
The tribunal also directed that the appellant should be given the opportunity to provide HMRC with any further relevant information within four weeks from the date of release of the decision, because at any stage, whatever the outcome of the appeal, the appellant could make a further application for SIVA and EPSS approval.
The tribunal took a much more pragmatic approach to the issue rather than the robotic, mechanical approach often taken by HMRC in these situations. It was also interesting that the tribunal required different, unconnected officers of HMRC to review the position.
Businesses should review whether they have been unfairly denied use of VAT accounting arrangements to their detriment as some redress may be possible.