The First Tier Tribunal has dismissed the appeal in relation to the default surcharge where the appellant failed to make a payment under the payment on account regime.
The appellant paid their VAT electronically to HMRC on the 7th day of the month following the end of the VAT period. However, as the appellant was registered to pay VAT under Payments on Account scheme (POA), VAT liability is required to be paid by the last day of the month following the end of the VAT period. This is slightly different as the additional 7 days normally allowed by electronic payments is not allowed for businesses subject to Payments on Account regime.
The taxpayer had put forward several reasons and excuses for the late payment including staffing problems, bank not processing payments on the last day and misunderstanding. These were not considered valid by the Tribunal and the appeal was dismissed.
The First Tier Tribunal has issued it’s decision on whether a property qualified for the principal residence exemption. The Tribunal judges felt that a short occupation period of three months together with the initial intention for to live permanently in the property were somewhat of benefit to the taxpayer. That said, the main facts were that that the property had a single bed and no other furniture, Mr. Yechiel had most of his meals in his parents’ house and did his laundry there as well spending his leisure time in the parents’ house. Based on these factors the Tribunal decided that the property did not qualify as the principal residence and disposal was subject to capital gains tax.
Our analysis: We have recently been appointed to represent various tax investigation cases where the client claims for a property to be their main residence whereas the quality of residence is not there. Simply by living in a property for a short while before selling it does not normally make it your principal residence for tax purposes. There are a number of factors to consider and as this exemption is widely abused, there are more cases ending up in the Tribunal.