Overclaimed input tax

The company was incorporated in 2016 and the sole director was Peter Williams. The company's stated business activity was to manufacture and supply air conditioning energy saving devices.

During its period of VAT registration between 2016 and 2019 the company claimed substantial repayments on the basis that £41 095 of total sales of £761 055 were zero-rated exports and there were also zero-rated non-exports of £720 140. In other words very few sales were standard rated. HMRC issued an assessment for £117 409 for the periods December 2016 to February 2019 disallowing input tax claimed by the company because the director could provide no evidence about the claims. It also imposed a penalty for deliberate and concealed behaviour (FA 2007 Sch 24 para 19) which became the director’s liability through a personal liability notice (PLN).

The company and the director appealed.

The director’s main argument was that...