This case concerns a situation where the VAT registration threshold was exceeded and an application for exception from registration.
Geoffrey Lane is an NHS consultant gynaecologist. He also makes taxable supplies of medical legal reports as an expert witness in personal injury or medical negligence claims. In October 2013 his rolling taxable turnover exceeded the registration threshold of the time (£79,000). The key issue in this dispute is whether, despite meeting the mandatory requirements for registration, the taxpayer could be exempt from registration under VATA 1994 Schedule1 para 1(3). This essentially allows exception from registration if the Commissioners are satisfied that turnover in the following year will not exceed a certain value (at the time £77,000). The First-tier Tribunal (FTT) supported HMRC’s decision not to allow the decision.
HMRC refused to allow the exception on the grounds that Mr Lane’s predicted turnover was only below the registration limit on the basis that he planned to retire part way through the year and not because he would trade but then expect his turnover to fall below the threshold.
The FTT began by concluding that the relevant date for making the decision was when the taxpayer was liable to become registered in October 2013 and not, as the taxpayer argued, the later date of the application. Therefore, the FTT noted that the HMRC could still have made a reasonable decision to refuse exception even though the actual turnover subsequently turned out to stay within the deregistration limit
The FTT added that the projected turnover of £65,000 was close to the deregistration threshold of £77,000. The FTT noted that turnover was difficult to project for such ‘complex demand-led work’. The FTT decided that it was reasonable for the Commissioners to conclude that a greater deal of certainty was required to grant what is an exception to the mandatory registration rules.
The Tribunal concluded that HMRC’s decision was reasonably reached and that there was no cause for the Tribunal to interfere. The taxpayer’s appeal was dismissed.To access the decision click here.
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