Not for registrar to decide

The taxpayer was a shoe designer who initially operated as a sole trader before transferring to a company in November 2007. HMRC raised a VAT assessment for £120 725 a month later.

The business went into liquidation in April 2009. The taxpayer proposed an individual voluntary arrangement (IVA) at a creditors’ meeting.

The proposal was vetoed and HMRC’s claims were admitted in full. The taxpayer appealed to the bankruptcy registrar against the decision to reject the IVA. She claimed during the hearing that the assessment was incorrect.

The assessment was withdrawn but the argument continued. The registrar dismissed the taxpayer’s appeal saying the assessment had created a statutory debt which was due at the creditors’ meeting. The chairman had been right to admit it.

The taxpayer appealed. She argued that the assessment had not been made to HMRC’s best judgment: it contained errors so serious...