No evidence to challenge taxpayer’s explanations

During unannounced visits to the taxpayer – a general store - the HMRC officer saw that the till was being opened without any sales being recorded. The subsequent investigation showed that this had happened 22 850 times in a one-year period. HMRC therefore raised VAT and corporation tax assessments on the basis that the taxpayer was suppressing sales. The taxpayer appealed.

The First-tier Tribunal agreed that HMRC had acted rationally in raising the assessments to the best of judgment. The officer had behaved ‘honestly and genuinely’. However the department then produced ‘little alternative evidence’ to challenge the taxpayer’s explanations.

The judge was though impressed by the taxpayer’s director and her partner’s credibility and accepted that in many cases the till was opened to give people change for the bus – given the shop was ‘surrounded by bus stops’. The tribunal concluded the business had not suppressed takings and...