Liability of a business with no records

The taxpayer registered for VAT in 2008 as a sole trader carrying out telecommunication repairs and supplies. The business ceased to trade in 2012 and was deregistered in 2013. He submitted only one VAT return for the first period April 2008 while he was registered so HMRC issued central assessments in the absence of the returns. The VAT payable was £14 036.

In 2014 the taxpayer filed returns for all outstanding periods with a net liability of £1 482. Most showed net repayments due from HMRC. A compliance visit in June 2016 revealed that the taxpayer had no business records so HMRC cut all repayment claims to nil and denied the VAT credits for the April 2010 and April 2011 periods. The officer did not challenge the returns that showed a net payment due to HMRC. The department also issued a penalty based on deliberate but not concealed...