RDF Management Services Ltd v HMRC

VAT: Termination of authorisation to operate flat-rate scheme

In RDF Management Services Ltd v HMRC (TC00387 – 8 March) a company (R) registered for VAT from October 2007 and applied to join the flat-rate scheme. Subsequently HMRC discovered that R was providing management services to another company (B) and that R's directors held 50% of the shares in B. Accordingly the effect of VAT Regulations 1995 SI 1995/2518 reg 55L was that R was ineligible to operate the scheme. HMRC therefore issued a notice of termination under reg 55P backdated to January 2005 and imposed a misdeclaration penalty. R appealed contending that it should not be treated as being associated with B. The Tribunal reviewed the evidence in detail rejected this contention and dismissed the appeal. On the evidence 'there were close organisational links between the companies in that...