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The taxpayer registered his service station business for VAT in 1991. At first he used an accountant to deal with the accounts PAYE and VAT but after a few years he took over the responsibility.
During a VAT inspection in 2008 the inspector noted that no zero-rated mark-up had been calculated for the purpose of VAT accounting. The taxpayer said the business had adopted VAT retail scheme B (direct calculation scheme 1) which had been used until at least 1997.
His method of calculation appeared to change at some point between 1997 and 2001 although he asserted he had been using one of HMRC’s authorised schemes.
The Revenue said he taxpayer could not have been using retail scheme B or a variant of it because there was no calculation of the zero-rated mark-up. The department assessed tax of £10 417 for the...
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