Tax authority has power to reduce claims

DCM was a VAT-registered business which specialised in the sale of dispensed spectacles and laser eye surgery under the name ‘Optical Express’. It was partially exempt for VAT purposes because it made supplies on which VAT was chargeable such as the supply of frames and lenses and supplies which were exempt from VAT such as dispensing services. The appeal had been before the First-tier Tribunal Upper Tribunal and Court of Session.

The first matter for the Supreme Court concerned an assessment issued in October 2005 for under-declared output VAT for the periods October 2002 to July 2003. The taxpayer said HMRC was out of time under VATA 1994 s 73(6) because it knew that ‘something was wrong’ with its apportionment method by January 2004 and from then had one year to make their...