VAT assessments issued by HMRC were out of time

During a visit to the taxpayer’s premises in July 2016 HMRC obtained till rolls and audit information. In August 2017 it raised an assessment for underpaid output tax relevant to the period August 2010 to April 2017. The usual four-year assessment period was extended because the omission of lunchtime sales from the VAT returns was deemed to be ‘deliberate and concealed’. HMRC also issued the director a penalty under FA 2007 Sch 24 on the basis the behaviour had been deliberate and concealed.

The First-tier Tribunal said the assessment was accurate apart from a small adjustment for 4% inflation and 5.6% zero-rated sales. However it was issued out of time for the periods August 2010 to July 2015. This was because the legislation allows HMRC to assess for a two-year period only if it fails to issue an assessment within one year of receiving all of...