VAT evaded dishonestly

The taxpayer supplied and installed heating and ventilation systems. Following an inspection HMRC concluded he had suppressed his profits and raised VAT assessments covering periods both in and outside the normal four-year time limit.

To use the assessment 20-year limit the Revenue had to show that the taxpayer had acted dishonestly to evade VAT.

He appealed claiming his paperwork had become extremely disorganised and some had been destroyed in accidents which was why he could not provide full records.

The First-tier Tribunal did not accept the taxpayer’s excuse. It found he had deliberately withheld or not kept records of sales and was guilty of dishonest conduct.

Given there were no records from which the HMRC officer could reconstruct earlier years the tribunal agreed he had assessed tax using his “best judgment” as allowed by VATA1994 s73(1).

Best judgment did not in the...