Assessment to correct input tax errors

The company made basic errors on its returns: input tax was claimed on payments such as insurance and bank charges that were either exempt or outside the scope of VAT; 20% input tax was claimed on invoices subject to 0% and 5% VAT; purchase invoices were missing – allegedly lost when the company was evicted from its trading premises by its landlord; and input tax claims were duplicated on the same supplies and also claimed on private and non-business expenses such as clothes.

HMRC raised an assessment which the director challenged. His main argument was that payment through the company’s business bank account should be adequate evidence for input tax purposes and that the visiting HMRC officer should have ‘exercised her discretion’ and allowed the claims. He also said the compliance officer who raised the assessment for £20 593 was ‘a disgrace to the HMRC services’ and he made...