HMRC demands £1 billion from Manchester business

The client

Florence Coke, a café owner in Gorton, Manchester got in touch through our free helpline for advice on an unreasonable demand sent by the HMRC for nearly £1 billion.

The client was obviously shocked to be sent such an excessive bill - it is extremely unlikely a single café in Manchester could run up such a VAT cost. However, it did not stop HMRC from pointing out its right to visit the business premises and seize her business assets if the £979,092,858 liability bill was not settled.

VAT on property services can be a complicated area; it is advisable to review what VAT property agents are entitled to early in the deal so that you are not surprised by any hidden expenses and risks further down the line.

Our advice

Our VAT consultants investigated the case and saw this as an example of the lack of scrutiny that letters leaving the HMRC offices are put under. They provided advice on dealing with the tax authority and helped Florence receive the correct VAT demand.

We understand that clients sometimes get unreasonable demands from HMRC but we always advise people to avoid blindly following these demands; clients should not be afraid to question the amount of money they are being told to pay, as most demands such as these have an element of guesswork to them.

Our VAT consultants immediately worked on putting a structure in place that gave the agent an equitable interest in the property, and allowed the client to avoid any misunderstandings. This meant it was possible for the agent to be paid outside the scope of VAT. With our help, the client sustained a significant saving when selling their land plots.