VAT treatment of overstated zero-rated sales

The company sold hot food inside the premises and on a takeaway basis. A dispute arose as to the percentage of cold takeaway sales relevant to purchases of coleslaw and cold dips – that is those that were zero rated for VAT purposes - and whether HMRC could assess tax going back one or four years.

The company’s external accountant withdrew from attending the court on the evening before the hearing on the basis of a ‘conflicting professional commitment’. It was agreed that the director of the taxpayer Mr M would present the appeal. The tribunal said he did this with ‘vigour and courtesy’.

For the period under review July 2014 to January 2018 the till in the shop was unable to record the zero and standard rated sales separately. This resulted in a test purchase carried out by an HMRC officer on 9 August 2018 when...