Sprowston Food and Wine Limited v The Commissioners for HMRC
[2024] UKFTT 747 (TC)
Jagtar Singh Rai & Anor (t/a Bursha Foods) v The Commissioners for HMRC
6 June 2024
[2024] UKFTT 511 (TC)
First-tier Tribunal
A shop owner disagreed with HMRC's tax bill based on till data. The judge said HMRC was mostly right about the amount owed, but wrong about the shop owner intentionally cheating, so reduced the penalties.
Key Facts
- •Jagtar Singh Rai and Sukhdev Singh Rai (Appellants) owned Bursha Foods, a convenience store.
- •HMRC issued VAT assessments and penalties for periods 02/14 to 02/16 based on data extracted from the store's tills.
- •The Appellants appealed, raising concerns about data reliability and penalty levels.
- •HMRC withdrew penalties for periods 02/14, 05/14, and 08/14.
- •The appeal focused on output tax assessments and penalties for remaining periods.
Legal Principles
HMRC can assess VAT if returns are incomplete or incorrect, using their best judgment.
Value Added Tax Act 1994, Section 73(1)
Appeals against assessments lie to the Tribunal.
Value Added Tax Act 1994, Section 83(1)(p)
Penalties are payable for inaccuracies in documents given to HMRC if careless or deliberate.
Schedule 24 Finance Act 2007, Paragraph 1
Penalties are reduced based on quality of disclosure (timing, nature, and extent).
Schedule 24 Finance Act 2007, Paragraphs 9 and 10
Tribunal has quasi-supervisory function regarding best judgment assessments and full appellate jurisdiction on amount.
Mithras (Wine Bars) v HMRC [2010] UKUT 115 (TCC)
A deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with an inaccurate document intending HMRC to rely on it.
Auxilium Project Management Ltd v HMRC [2016] UKFTT 249 (TC)
Outcomes
Appeal against output tax assessments dismissed.
HMRC assessments were made to the best of their judgment, based on till data analysis. Appellants failed to provide sufficient evidence to overturn the assessments.
Appeal against deliberate penalties allowed in part; penalties for careless conduct substituted.
HMRC failed to establish that the Appellants' conduct was deliberate. The Tribunal found the conduct to be careless and adjusted penalties accordingly, applying 60% mitigation for disclosure.
Similar Cases
Mauheed Johngir & Anor v The Commissioners for HMRC
[2024] UKFTT 274 (TC)
Bangla Lounge (Harborne) & Anor v The Commissioners for HMRC
[2024] UKFTT 831 (TC)
Martin Peter Byrne and Ellena Byrne t/a EVA v The Commissioners for HMRC
[2024] UKFTT 103 (TC)
Good Choice 2016 Limited & Anor v The Commissioners for HMRC
[2024] UKFTT 544 (TC)