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.