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KDT Management v HMRC

In KDT Management v HMRC [2015] UKFTT 690 (30 December 2015) the FTT found that HMRC’s decision to assess KDT under a higher flat-rate had been unreasonable.

KDT had been authorised by HMRC to account for VAT under the flat-rate scheme for small businesses (VAT (Amendment) (No 2) Regulations 2002 s 7 Pt VIIA reg 55B) in 2009.

HMRC had subsequently raised an assessment with interest on the basis that KDT had applied the wrong flat rate from 2011. KDT argued however that it had used the right rate 11% which applied to advertising. However when completing VAT Form 600FRS KDT had indicated that its main business activity was ‘management consulting’. HMRC therefore contended that it could not retrospectively change the flat-rate sector chosen by the trader (relying on Notice 733 para 4.2).

The FTT found that KDT did carry out advertising services and...

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