Case study: VAT registration error & personal penalty

The Problem

A restaurant business was purchased as a Transfer of Going Concern (TOGC). The outgoing accountants incorrectly advised the new owner not to register for VAT immediately, but to wait until turnover exceeded the £90,000 threshold.

This resulted in:

• HMRC treating the delay as a “belated notification”
• A £34,000 inaccuracy penalty, classified harshly as “deliberate”
• The business entering liquidation
• HMRC attempting to charge the penalty personally to the director

Our Solution

Our VAT specialists:

• Reviewed the circumstances in detail
• Appealed the penalty directly to HMRC using several arguments including timing
• Successfully had the entire penalty withdrawn

Outcome

The director avoided a £34,000 personal liability, and HMRC accepted our challenge in full.

Why this matters

Incorrect VAT advice can lead to severe financial and personal repercussions.

At James Cowper Kreston we have an experienced team of VAT specialists many who have HMRC experience meaning we are able to identify issues, challenge HMRC where necessary, and protect your position. If you would like to discuss this further, please get in touch with a member of our Indirect Tax Services team here.