Payment of assessment would cause financial hardship

The taxpayer bought luxury merchandise in the UK such as perfumes and sold them to customers in Asia. It registered for VAT in January 2020 but HMRC had concerns about the accuracy of VAT returns so issued an input tax assessment for £273 858 for periods February 2021 to January 2022. The assessment was issued by using the officer’s ‘best judgment’ (VATA 1994 s 73(2)).

The legislation at s 84(3B) requires a business to pay an assessment in full or deposit the amount owed to HMRC before an appeal can proceed to a substantive hearing. The exception is if the payment ‘would cause the appellant to suffer hardship’. It is an all or nothing situation either the assessment is paid or hardship is granted in which case no amount needs to be paid until a decision is reached. The taxpayer here appealed but claimed...