Personal liability notice issued to collect penalty

Salford Santos Kebab Ltd registered for VAT on 1 January 2018 and the taxpayer was the only director. It mainly sold hot take-away food - pizzas burgers and kebabs which were all standard rated. The only zero-rated items were a few salad components such as a salad wrap.

Routine HMRC checks established that the company was recording 84% of its sales as zero rated even though salad items were clearly a minor part of its trading. HMRC decided that only 1% of sales were zero rated and issued an assessment for £56 140 using its powers of best judgment under VATA 1994 s 73(1). It also issued a penalty of 52.5% of the tax for ‘deliberate but not concealed behaviour’.

The company went into liquidation so HMRC used its powers under FA 2007 Sch 24 para 19(1) to charge the taxpayer for...