Key Facts
- •New Claire Wine Ltd. (appellant) appealed against five discovery assessments for corporation tax totaling £250,654.68, VAT assessments totaling £176,656, and a penalty notice for £149,139.72.
- •The assessments stemmed from HMRC's discovery of off-record sales and inaccuracies in tax returns.
- •HMRC's evidence was largely derived from a server seized by Italian authorities during a criminal investigation into TIWC, a supplier to the appellant.
- •The appellant's record-keeping was found to be significantly deficient.
- •The appellant's representatives failed to provide sufficient information or evidence to support their arguments.
- •The Tribunal admitted evidence from the Italian server, rejecting arguments about hearsay and admissibility.
Legal Principles
Admissibility of evidence in tax tribunals is broad, not constrained by section 9 of the Civil Evidence Act 1995.
Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, Rule 15
In best judgment assessments, HMRC must fairly consider all material before them and reach a reasonable, non-arbitrary decision. Extensive investigation is not required if sufficient material exists.
Van Boeckel v C & E Commissioners [1981] STC 290; C A McCourtie LON/92/191; Rahman (t/a Khayam Restaurant) v Commissioners of Customs and Excise [2002] EWCA Civ 1881; Pegasus Birds Ltd v Commissioners of HM Customs and Excise [2004] EWCA Civ 1015
Discovery assessments are permissible if an officer believes (and a reasonable officer could believe) that there's insufficient tax assessed, whether due to careless or deliberate behavior.
Schedule 18 Finance Act 1998; Jerome Anderson v HMRC [2018] UKUT 0159 (TCC)
A deliberate inaccuracy in a tax return occurs when a taxpayer knowingly provides an inaccurate document with the intention that HMRC relies on it.
Auxilium Project Management Ltd v HMRC [2016] UKFTT 249 (TC)
Tax disputes generally fall outside the scope of Article 6 of the European Convention on Human Rights.
R (oao ToTel Limited) v the FTT and another [2011] EWHC 652
Presumption of continuity applies to tax liabilities unless the taxpayer demonstrates a change in circumstances.
Jonas v Bamford 1973 51 TC; Dr I Syed v HMRC [2011] UKFTT 315 (TC)
Outcomes
Appeal dismissed in principle.
The Tribunal found the appellant's record-keeping deficient, its behavior deliberate (or at least careless), and the assessments and penalties to be justified. The quantum of the assessments and penalties was remitted to the parties for agreement, with the Tribunal to decide if agreement was not reached.