Waynefleet Limited v The Commissioners for HMRC
[2023] UKFTT 710 (TC)
SC Business Gateway Ltd v The Commissioners for HMRC
13 February 2024
[2024] UKFTT 140 (TC)
First-tier Tribunal
A company tried to avoid paying a large VAT bill before its appeal was heard, claiming it would cause hardship. The judge disagreed because the company didn't provide enough proof that it couldn't afford to pay. They had some money in the bank, and didn't provide essential documents showing their financial situation.
Key Facts
- •SC Business Gateway Ltd. appealed a VAT assessment of £273,857 for periods 02/21 to 01/22.
- •The appeal hinged on whether the appellant would suffer hardship if required to pay the assessment before a substantive hearing.
- •The appellant's director, Ms Li, provided bank statements with no transactions, citing ceased trading and frozen accounts.
- •HMRC rejected the hardship application due to insufficient supporting documentation.
- •The Tribunal considered evidence of frozen accounts (RBS, Bank of China), a potential bounce-back loan, and a Barclays account with £15,000.
- •The Tribunal noted inconsistencies in Ms Li's oral testimony and the lack of key documents (company accounts, lease agreements, bank correspondence).
Legal Principles
Hardship under s 84(3B) VATA requires demonstrating inability to pay without financial hardship, considering immediately or readily available resources.
Value Added Tax Act 1994, s 84(3B)
The burden of proof for hardship lies with the appellant, requiring sufficient evidence; lack of contemporaneous accounting evidence may weaken oral assertions.
Case law precedent
The hardship assessment is a value judgment based on the most up-to-date information; a lengthy investigation of assets and liabilities is not required.
R (on the application of ToTel Ltd) v HMRC [2011] EWHC 652 (Admin); ToTel Ltd v HMRC [2014] UKUT 485
The appellant's responsibility for their financial situation is relevant; deliberate actions leading to inability to pay are considered.
ToTel Ltd v HMRC [2014] UKUT 485
The test is whether the appellant has the capacity to pay without financial hardship, not merely whether payment would involve hardship.
Seymour Limousines Ltd v HMRC [2009] UKVAT V20966
It is not disproportionate to require the appellant to demonstrate hardship as they possess the necessary financial information.
R (on the application of ToTel Ltd) v HMRC [2011] EWHC 652 (Admin)
The hardship test is an “all or nothing” assessment at the hearing date; available borrowing resources are considered, but property sale is exceptionally considered.
NT ADA Ltd. v HMRC [2019] UKFTT 0333
Outcomes
The Tribunal dismissed the appellant's hardship application.
The appellant failed to discharge the burden of proof; the evidence provided (bank statements with no transactions, inconsistent oral testimony, lack of supporting documentation) was insufficient to demonstrate hardship.