Unreliable records

The taxpayer ran a takeaway food business. He cancelled his VAT registration in October 2007 when he planned to sell the business – but the sale fell through. He did not reregister because the turnover was below the registration threshold.

An HMRC investigation found that the firm’s records were inadequate invoices were missing and sales were understated.

The takeaway should have been VAT registered from 1 January 2008 to 31 January 2010 said the Revenue officer who imposed penalties. 

The taxpayer appealed.

The First-tier Tribunal accepted HMRC’s evidence that the business records were unreliable and the cash register readings did not agree with the taxpayer’s handwritten notes of daily takings.

The judge also accepted the Revenue officer’s estimations of the takings noting they contained a “rough-and-ready element” but erred on the side of generosity.

The tribunal agreed that the taxpayer’s business should have been VAT...