Simpson & Marwick v Commissioners for Her Majesty's Revenue and Customs
Decision date: 16 August 2010
Neutral citation: [2010] UKFTT 380 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerns whether a VAT-registered solicitor could claim bad debt relief under s36 VAT Act 1994 for the entire unpaid "VAT-only" amounts invoiced to insured clients, or only for the VAT fraction of the overall consideration. The First-tier Tribunal held there was a single taxable supply to the insured such that "consideration" comprised fees plus VAT, and relief under s36 is limited to the proportion of that consideration actually written off. The Tribunal rejected arguments based on legitimate expectation and Convention/property rights and dismissed the appeal, upholding HMRC's amended assessment of £216,862.36.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a single taxable supply comprises professional fees plus VAT, the word "consideration" in s36 must be read as the aggregate (fees together with VAT), and bad debt relief is confined to the portion (the VAT fraction) of that overall consideration which has been written off as irrecoverable.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal indicated that prior HMRC acceptance of returns or routine inspections, absent awareness of the taxpayer's internal invoicing practice, will not necessarily create a legitimate expectation to permit recovery beyond the strict statutory entitlement; oral or general advice and later references to statutory guidance are insufficient to override the statutory interpretation.