Understated sales on returns

The taxpayer was a sole trader landlord of a pub with a main bar and a lounge bar each of which had a till.

After a routine visit the visiting HMRC officer found discrepancies between sales declared on the returns compared with the turnover on its annual accounts. The accounts showed a higher figure.

At a meeting with HMRC the taxpayer admitted that he had understated his VAT liability since he was registered as the Dolphin public house. HMRC therefore had to establish the extent of the underpaid VAT using its powers of ‘best judgment’ (VATA 1994 s 73(1)). It issued an assessment covering the period March 2004 until September 2017 and this was upheld by a different reviewing officer in June 2018. It covered a longer period than the usual four years because of the ‘deliberate’ actions of the taxpayer so the 20-year time...