Erroneous records

The taxpayer operated a confectionary kiosk in a London station. The business ceased trading in February 2008.

During a VAT assurance visit HMRC concluded the taxpayer had overstated input tax by entering in her records cumulative totals of invoices received during the week rather than the cost incurred in each particular week.

The officer noted this had happened on several occasions.

The Revenue issued revised assessments for VAT and income tax based on the fact purchases had been overstated for both VAT and income tax purposes and the apportionment between standard and zero rated supplies was incorrect.

The assessments were made for the years 2004/05 2005/06 2006/07 and 2007/08 because the taxpayer would have repeated the same mistakes in her recordkeeping throughout the years.

The taxpayer appealed.

The First-tier Tribunal accepted HMRC had used a “legitimate and reliable method of calculating the sales” based on...