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A warning by BKL Tax about the reliability of advice given by HMRC's helplines.

When is a Helpline not a 'Help'line...?

Suppose you run a small company. Suppose you are unsure of the correct VAT treatment of a particular transaction. You might, if you are unable or unwilling to pay for costly professional advice, be encouraged by the HMRC website which promises that

"If you can't find the answer to your question on the HMRC website, the quickest and easiest way is to ring the VAT and Excise helpline where you can get most of your VAT and Excise questions answered."

You might expect that you would be given the right answer (OK, OK - remember that you are for this purpose of this exercise a naive small trader, not a cynical old tax professional). When you find that the advice you understood you had been given was wrong; and that HMRC are seeking to collect £300,000 of VAT that you thought you had been assured wasn't due, you might feel aggrieved. If you were to go to court you might reluctantly accept that it was predictable that the court might prefer the evidence of HMRC's allegedly contemporaneous note to your own evidence. However, you might be surprised to learn that, in the court's view, you would have lost the case even if you had been able to adduce absolutely cast-iron irrefutable proof that you had been given and had relied upon incorrect advice!

Yet that was precisely the decision handed down in Corkteck v HMRC [2009] EWHC 785 recently. Specifically,

"The [helpline] was only held out as a source of "general advice", rather than as a source of binding rulings on the proper tax treatment of specific transactions," such that the unfortunate taxpayer "could not reasonably have thought that [HMRC] had given [him] a fully considered and binding ruling in [his] favour."

While naked self interest has always looked askance at the extent to which freely proffered HMRC advice steals the bread from the very mouths of professional advisers struggling to make an honest living; and while it's easy to say that Mr Malde (for such was his name) would have been better advised to seek proper advice in the first place, it does seem highly regrettable that the unreliability of the National Advice Service should be judicially endorsed in this way.

Perhaps it should be renamed the No-Help-At-All line.