VAT Tribunal – Reduced rate
In this Tribunal case, the appellant employed a builder to convert a listed building he owned to a single dwelling. The bulk of the charges from the builder for this conversion should have been at the reduced VAT rate of 5%. The builder invoiced the appellant with 17.5% VAT which the appellant reluctantly paid. There followed protracted discussions with HMRC, the builder and the appellant which eventually resulted in confirmation from HMRC that the bulk of the charges should have been subject to the reduced VAT rate. However, the builder refused to issue a refund.
Eventually, the appellant took matters into his own hands and attempted to recover the excess VAT he had been charged through his own VAT return and provided a detailed explanation of his reason for doing so. HMRC levied a misdeclaration penalty on the appellant for submitting an incorrect VAT return.
The case ended happily for the appellant and he was eventually able to secure a refund of the VAT due from the builder. The Chairman allowed the appeal saying that that although “self-help” should not be encouraged, in these unusual circumstances the Chairman was willing to reduce any penalties imposed to nil.