Nottingham Forest Football Club Loses £350k VAT Appeal

HMRC and the Nottingham Forest Football Club were engaged in a VAT dispute that ended with Nottingham Forest losing their appeal. The major issue of the dispute was the confusion of dates for undeclared VAT. The case was taken to the First Tier Tribunal (FTT) and then to the Upper Tribunal.

Timeline of the Case

HMRC notified the Nottingham Forest Club about an undeclared output tax of £88,125 and an over-declared input tax of £258,409, totalling £346,534 (later revised to £348,177).  The VAT return did not have enough information on undeclared tax. So, the tax authority issued an official notice on 29 April 2019 to the Club regarding VAT under-declaration.

The club had submitted an error correction notice for £126,984 in November 2015. An HMRC officer and finance officer of Nottingham Forest were in communication for six weeks starting from 16 April 2018.

HMRC did not add any penalty charges, believing that the club’s error was innocent and was raised due to a change of accounting systems. However, the club’s finance officer did not agree with HMRC.

What Were the Key Points of Dispute?

The case was taken to the First Tier Tribunal (FTT) as the club argued that HMRC breached the one-year time limit for VAT assessment under Section 73(6)(b) of the VAT Act 1994. However, FTT dismissed the appeal and ruled in favour of HMRC in 2022. So, the case was appealed to the Upper Tribunal.

The Club appealed to the Upper Tribunal on three grounds of appeal. Here is a breakdown of the appeal:

• FTT did not apply the correct legal tests as set out by relevant case law
• FTT erred in how it handled the burden of proof
• Club argued that Bell downloaded the general ledger, so HMRC had all the required information by 20 April 2018. So, the assessment date of 29 April 2019 is invalid.

HMRC maintained its statement saying the crucial date was 9 May 2018. The Upper Tribunal judge notes that the lack of evidence of the accounting software made it difficult to decide. So, the case was dismissed by the Upper Tribunal.

Conclusion

The Nottingham Forest Football Club lost a VAT dispute with HMRC in the case of undeclared VAT. The case was appealed to the First Tier Tribunal and then to the Upper Tribunal. However, both tribunal courts dismissed the appeal due to insufficient information.