Hipisol Ltd v Commissioners for Her Majesty's Revenue and Customs
Decision date: 16 December 2009
Neutral citation: [2009] UKFTT 392 (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
HMRC imposed two default VAT surcharges on amounts due to late VAT returns/payments; Hipisol Ltd (via Mr Roy) appealed. The Tribunal found Mr Roy credible and that HMRC’s telephone advice on 6 July 2006 misled or ill-advised him, constituting a reasonable excuse so the £612.02 surcharge was quashed. The Tribunal also found HMRC had applied a later payment to the earlier surcharge causing an improper shortfall and quashed the £91.80 surcharge. Both appeals were allowed.
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: medium
Where a taxpayer is materially misled or ill-advised by HMRC about how to avoid or reduce a default surcharge, that misinformation may amount to a reasonable excuse to set aside the surcharge; and HMRC’s application of a taxpayer’s payment to an outstanding surcharge rather than to the relevant VAT liability can create an improper shortfall and render any consequential surcharge invalid.
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’s notes suggest that a taxpayer’s credible oral evidence about HMRC telephone advice can be decisive where HMRC do not contradict the account, and that advice to delay action until after receipt of a surcharge notice may materially prejudice the taxpayer’s ability to mitigate liability.