VAT Misdirection – Change in HMRC policy
A well known VAT Extra-Statutory Concession (ESC) has been withdrawn with effect from 1 April 2009. The ESC, also known as the Sheldon Statement, was relevant where an officer of HMRC gave incorrect VAT advice despite being aware of all relevant facts. Where this incorrect advicenegatively affected a taxpayer the ESC said that any future VAT assessments would only be valid from the time a correct ruling was issued and the taxpayer notified.
HMRC have announced that the ESC is being withdrawn as in their opinion case law is now sufficiently clear in scenarios where HMRC have given incorrect advice in full possession of the facts.
Going forward, taxpayers who are affected by incorrect rulings must in general rely on HRMC’s guidance and procedures. There are two further options of complaining directly to your MP or applying for Judicial Review which are rarely used.