Ely Businessman Left "Shocked and Staggered" After Court Rules Taxman Can Claim £450,000 in Back Tax
PUBLISHED: 10:22 12 May 2010 | UPDATED: 13:31 02 June 2010
AN Ely businessman said he was left feeling shocked and staggered after a High Court judge ruled that the taxman could pursue his business for a staggering £450,000 in backdated tax. District and city councillor Ron Bradney said he had been left with no
AN Ely businessman said he was left feeling "shocked and staggered" after a High Court judge ruled that the taxman could pursue his business for a staggering £450,000 in backdated tax.
District and city councillor Ron Bradney said he had been left with no option but to liquidate his business after a senior judge ruled that a VAT exemption scheme set up for Ely fitness club, The Atrium, was ineffective.
The claim by Her Majesty's Revenue and Customs (HMRC) dates back to March 2000 when, on advice from tax consultants, Cllr Bradney decided to set up a scheme that allowed him to qualify for VAT exemption as a sporting facility.
Cllr Bradney said that HMRC had initially given him permission to do this but, after the loophole was closed in 2003, it issued him with a bill for £457,131, a decision which left the former mayor flabbergasted.
"I was shocked and staggered by the decision because we had had permission from Revenue and Customs (HMRC) up until 2003 to use the exemption but they suddenly decided to change the rules and said they would be back-dating tax, he said.
"If they had just said that they were changed the rules than I would have said 'ok' but they decided to pursue us for back-dated tax and I wasn't happy so I decided to fight the decision.
"They [HMRC] are incredible bullies and they have been teasing us at every stage. They have starved me out and after seven years I have been left utterly drained by it all."
A tribunal heard last year found in favour of Cllr Bradney's case but HMRC opted to appeal the decision and Mr Justice Roth sitting in the High Court, agreed with HMRC's arguments that it should be able to pursue Atrium Club Ltd for the back-dated tax.
If Cllr Bradney had decided to appeal the decision in Europe it would have cost him in excess of £250,000, a risk he said he wasn't prepared to take.
As a result Cllr Bradney has been forced to put Atrium Club Ltd into liquidation although The Atrium will continue to operate as normal under the management of a new company, Ely Fitness Limited.
"The gym will remain open as normal and there will be no change to members or the facilities," he said.