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the output tax issues
the output tax issues
The original check conducted by HMRC into the 09/22 Return, and HMRC’s assessments, included an assessment of underpaid output tax. The issue is not relevant to this appeal and we are aware that these matters may be the subject of future enquiries by HMRC. Accordingly, the evidence and arguments about whether output tax is due were not explored in this appeal and we only make findings of fact in respect of the output tax issues as background to determining the input tax matters in this appeal.
Mr Murphy’s evidence, which we accept for the purposes of this appeal, was that the Appellant bought a large house at Cromley Road, Stockport, partly demolished it, refurbished the remaining part and built a new house, semi-detached from the refurbished house. The appellant then sold the resulting two houses, 6 and 6b Cromley Road. The evidence was not clear but Mr Murphy’s evidence was that 6b Cromley Road was sold for £630,000 on 26 November 2021. The second property appears to have been sold in October 2022 for £670,000.
The sale of 6b Cromley Road was included in the sales figure reported in Box 6 of the 09/22 Return but no output tax declared. In the questionnaire completed by the Appellant the sales were stated as being standard rated.
Ms Wilkinson decided that there was no evidence that zero rated treatment applied to the sale of 6b Cromley Road or any other sales reported in the 09/22 Return and so in the assessment of 6 October 2023, assessed the Appellant for 20% of the sales amount of £738,465 in box 6.
In the statutory review HMRC the reviewing officer came to the following conclusions on the output tax issues;
The sale on November 2021 was before the EDR and so, even if VAT were due, it would not be payable in the 09/22 Return.
A number of other supplies upon which the Appellant had accounted for output tax of £5,139.16 had also taken place prior to the EDR and so should not have been included in the 09/22 Return.
There was an outstanding issue as to whether the Appellant’s EDR should be treated as being an earlier date.
As a result, the output tax assessment should be reduced from £123,077.50 to £16,553.87, that is £5,139.16 less than the £21,693.03 originally declared by the Appellant.
The Appellant did not take issue with this outcome and so we have treated the output tax position to be agreed for the purposes of this appeal.