Leader: A hiding to nothing and a VAT ruling

And so the taxman faces yet another attack on its attempts to protect the
Treasury’s coffers. Ironically, it’s companies near

to collapse that are looking to claim back VAT on fees paid for advice they
received to help them stay afloat – when on previous occasions, during better
times, the taxman had fought to hold on to VAT linked with advice for M&A

While its loss to MyTravel put HM Revenue & Customs out of pocket to the
tune of £1m, it’s potentially just the tip of the iceberg.

With the taxman trying to do its bit by offering time-to-pay arrangements to
struggling businesses, this might well feel like a kick in the proverbials. If
the taxman does challenge the MyTravel case then it would become clear that it
is worried of the implications of the result and its impact on future cases.

If you take an even broader view on this, then the biggest concern would be
whether the recession gives rise to other types of tax claim based around
companies threatened with collapse that puts the government under even further
pressure. With such a huge public deficit, HMRC, and Mr Darling, could be
fighting a losing battle.

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