VAT assessments contained errors

The taxpayer’s business consisted of two sandwich shops with mainly take-away sales and some limited seating for consumption of food and drink on the premises. It was accepted that both standard and zero-rated sales were being made with the taxpayer claiming that all staff had been trained to record the VAT liability at the point of sale. His wife would then produce daily Z-reports from the till which the business accountant used to calculate the quarterly VAT returns.

HMRC noted a low percentage of declared standard-rated sales in the accounting records (11%) expecting the actual figure to be between 25% and 35% for this type of business. An unplanned visit indicated a figure of 55% for standard rated sales; the taxpayer was asked to carry out two weeks of self-invigilation and this indicated that standard rated sales were 33.58% of total sales. HMRC issued an assessment for...