VAT and the mis-coding of products resulting in incorrect VAT figures

Further recent decisions have been released from the First-tier Tribunal  and on the whole, the VAT cases have gone in HMRC’s favour.  The case of Panesar Enterprise UK Ltd and Sipp Food Ltd [2014] UKFTT 289 (TC) is a particularly interesting one.

Two companies were franchises of Burger King. When they were set up, they installed a software system recommended by Burger King. The system was pre-programmed to distinguish between standard and zero-rated sales. Unknown to the companies, some of the products had been mis-coded, resulting in incorrect VAT figures and under-declarations of output VAT. The companies appealed against assessments on the grounds that the under-declarations had not been caused by any fault of theirs, and neither company was in a position to pay the amount demanded. The tribunal said that a taxpayer could appeal against the fact of an assessment or against its amount, neither of which were challenged in this case. The only challenge here was that the error did not lie with the companies and that they could ill afford to pay the assessments. Neither of those grounds were issues which fell within the tribunal’s jurisdiction. HMRC’s application to strike out both appeals was allowed.

For further information and help on the mis-coding of products resulting in incorrect VAT figures and under-declarations of output VAT, please contact the TaxDesk on 0845 4900 509 and ask for Vaughn Chown.