In this case there seems to have been no suggestion that the goods in question had not been exported and in previous dealings with HMRC the procedures/evidence had been acceptable. Therefore, HMRC seems to have taken a very harsh approach to perceived procedural deficiencies. Whatever the rights and wrongs of the appellants processes, there was clear evidence that exports had occurred and no indication of any revenue loss. We would like to think that HMRC’s normal approach in that situation would be to ask the taxpayer to address the perceived deficiencies, not to raise assessments for VAT that HMRC probably realised was not due. Compliance with administrative rules is important otherwise the VAT system is open to abuse. However, historically HMRC tended to consider what those administrative rules are supposed to achieve and whether that purpose has been subverted. In this case HMRC sought to penalise documentation errors that (on a broad evaluation) did not devalue the proof of export. The apparent shift of approach by HMRC certainly highlights the need to consider whether acceptable proof of export is held in relation to zero-rated export sales.
Source Constable
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