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Royal Borough of Kesington & Chelsea v HMRC

In Royal Borough of Kesington & Chelsea v HMRC (TC03850 – 30 July 2014) the FTT found that HMRC had not discharged its burden of proof as a result of the destruction of old records.

The Royal Borough of Kensington & Chelsea (RBKC) had overpaid VAT by over £550 000 (covering the period from 6 April 1986 to 31 March 1997) and the issue was whether it was entitled to a repayment of that amount (under VATA 1994 s 80). The claim resulted from a change of practice of HMRC to the effect that no VAT should have been charged on building control fees.

Under a ‘Method 2 agreement’ – as set out in HMRC guidance – local authorities could authorise HMRC to make payments directly to claimants. RBKC had duly entered into such an agreement with HMRC and the question was whether the agreement was an assignment/waiver of...

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