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One minute with... Vaughn Chown

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How’s life at Gabelle?

I became managing partner in January 2017, succeeding Paula Tallon who has temporarily moved to Australia. She remains a partner and continues to provide tax advice to clients. This effectively enables us to deliver 24/7 tax advice across the different time zones!

I have also been heavily involved in the integration process following a recent transaction with Abbey Tax, the UK’s leading fee protection insurance provider, which makes us the largest independent specialist tax consultancy offering strategic tax advice and expert tax support.

You have represented many cases in the VAT tribunal. Is there a particular case that stands out?

I have had many cases where we successfully contended that items should be zero rated and while all the cases were important in their own right, it was the first food case – Bioconcepts Ltd V.11287 – which was the most memorable to me. In that case, we successfully demonstrated what a beverage was and to this day HMRC use that case as useful guidance as to the definition of a beverage. It’s contained in HMRC’s VAT manuals (at VFOOD7520 onwards).

HMRC has adopted the definition given by the tribunal in this case as a workable general definition of a beverage. The beverages test is in five parts. It must be a drinkable liquid that is commonly consumed; and it must be:

  • characteristically taken to increase bodily liquid levels;
  • taken to slake the thirst;
  • consumed to fortify; or
  • consumed to give pleasure.

The principle of the test is based around the idea that a drinkable liquid is not automatically a beverage, but could be a liquid food that is not a beverage.

So the definition we provided is still a workable test, and it gave me food for thought (excuse the pun) and got me thinking: were toasted bagels, baguettes, paninis, shredded duck, naan bread really hot food and standard rated, or were they hot as a consequence of some other process, e.g. freshly baked, to make the product crispy etc? The other cases that led from this case are history, as they say!

If you could make one change to a tax law or practice, what would it be?

I would encourage HMRC to be more user friendly towards advisers and businesses. Businesses can receive a penalty between 0­–30% of the amount disclosed for voluntarily disclosing an inaccuracy; this leads to confusion and uncertainty as to whether a penalty will apply.

Current procedures allow businesses to correct errors under £10,000 on a subsequent VAT return. Errors of less than £50,000 can also be adjusted in the same way if they are less than 1% of the net outputs of the business for the period in question, but any larger disclosures must be made to HMRC by a separate written voluntary disclosure.

Despite making a disclosure on a VAT return, HMRC still needs to be informed of the disclosure to determine whether any penalty will apply. This added administration and uncertainty and the fact that if a business does not notify HMRC the penalties are likely to be higher, possibly reduces the incentive for businesses to make disclosures.

I was heartened to see the above issue is mentioned in the Office of Tax Simplification’s (OTS) November 2017 document, VAT: routes to simplification. The OTS recommends that HMRC should consider ways of reducing the uncertainty and administrative costs for business relating to potential penalties when inaccuracies are voluntarily disclosed. The OTS also highlights that there is considerable uncertainty around suspended penalties, which needs to be reviewed.

Finally, you might not know this about me but...

I flew a glider and it wasn’t until I was coming in to land and had to fly over some trees just before the grass runway that I suddenly thought, I only have one chance at this ... I survived! 

Issue: 1379
Categories: One minute with