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T O’Rourke trading as Southgates UK (TC6335)
HMRC’s best judgement
The taxpayer bought and sold secondhand vehicles and also carried out repair work. The annual accounts for years ending 31 July 2011 to 31 July 2014 showed total losses of £164 000 mainly financed by the introduction of high figures of capital.
HMRC considered the losses were unsustainable and asked for an explanation of discrepancies in the accounts and evidence to support the capital introduction. It had evidence of 12 cars bought in 2014 but none that they were sold. There were also instances of spare parts purchased in December 2012 with no link to either a sold or repaired vehicle. It raised an assessment for £29 539 using ‘best judgement’ (VATA 1994 s 73(1)). The taxpayer appealed.
The First-tier Tribunal had to consider whether the officer had...
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