A court has reprimanded HMRC after the taxman demanded £1 million from a scaffolder – over just £11,000 in unpaid tax.
Matthew Hodges, who runs Aqua Blue Scaffolding in Kent, was found by the Revenue to owe £529,536 in VAT on undeclared income, along with a £399,734 penalty.
But the court found that Mr Hodges in fact owed just £11,153, and that it would have been physically impossible for the sole trader to complete the number of jobs required in the period to account for HMRC’s figure.
HMRC began investigating Mr Hodges following an operation in which they track the use of signage displayed outside sites.
They found that the scaffolder had failed to declare VAT on nine out of every ten jobs. But the Revenue massively overestimated the total amount that Mr Hodges would have been able to secure given that his is a one-man operation.
Tribunal judge John Brooks said: “For Mr Hodges to have generated such additional turnover he would either have had to double the amount charged to his customers or increase his workforce.”
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