In Frank Galliers Ltd v C & E Commrs [1993] BVC 70, HMRC unsuccessfully tried to use VATA 1994, s. 71(1) by arguing that an error of an employee of a company must bring the company within s. 71(1)(b) (or FA 2008, Sch. 41, para. 20(2)(b)) since the company is relying on the ‘act of another’.

However, a company can only operate through its employees and if an employee of a company is negligent then his negligence is imputed to the company. The purpose of the anti-avoidance provision is to ensure (at p. 76F):

‘not that the employment of another person makes the establishment of a reasonable excuse more difficult, but that it does not make it easier.’

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