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The VAT investigation
The VAT investigation
On 29 March 2019 HMRC received a VAT repayment claim from NNN for £69,888 in respect of the VAT period 1 December 2018 to 28 February 2019. Mr Auchterlonie started a check on the claim. There then followed some engagement with NNN, including with Mr Olatunji and the provision of information by NNN to HMRC.
On 22 February 2021 HMRC issued an assessment for the period 02/17 to 08/18 for £606,164 (“the VAT Assessments”). As enquiries were continuing, HMRC suspended the time limit to appeal.
On 12 April 2022 Mr Auchterlonie wrote to NNN explaining that HMRC remained of the view set out in the 22 February 2021 letter which was their preferred view but, in addition, HMRC had an alternative view, which would apply if HMRC’s preferred view was incorrect. The letter stated that NNN had 30 days from the date of the letter in which to request an independent review or appeal the assessments to the Tribunal.
NNN made an in-time appeal of the VAT Assessments to the Tribunal (“the VAT Appeals”).
On 10 November 2022 Mr Auchterlonie wrote by e mail to NNN’s adviser, Ashaf Pervez of ABC Accountants, advising him that HMRC intended to raise penalties as follows;
On HMRC’s preferred view, for failure to take reasonable care
On HMRC’s alternative view, for some accounting periods, penalties for deliberate behaviour and for other accounting periods, penalties for failure to take reasonable care
HMRC were considering whether a PLN should be issued to Ms Adeosun in respect of the deliberate and concealed behaviour
Mr Auchterlonie explained that whether any penalty applied depended on whether HMRC’s preferred or alternative view in the VAT Assessments was determined to be correct.
On 11 November 2022 Mr Auchterlonie telephoned Mr Pervez about Mr Aucherlonie’s e mail of 10 November. Mr Pervez said he intended to discuss it with his clients.
On 7 March 2023 HMRC issued a penalty explanation letter to NNN on the basis of HMRC’s preferred view and in the amount of £168,210.49.
On 21 March 2023 Mr Auchterlonie telephoned Mr Pervez. Mr Pervez said he had not been in contact with his client for a couple of months and he was not sure whether he was still instructed.
On 21 April 2023, HMRC issued a penalty assessment notice for £168,210.49 to NNN on HMRC’s preferred view. The notice advised NNN of its right to request a statutory review or make an appeal to the Tribunal within 30 days of the date of the notice.
On 23 May 2023, HMRC issued a penalty explanation letter to NNN in respect of the HMRC’s alternative view.
On 26 June 2023, HMRC issued a penalty assessment notice for £246,532.36 in respect of the HMRC’s alternative view. The notice advised NNN of its right to request a statutory review or make an appeal to the Tribunal within 30 days of the date of the notice.
On 29 June 2023, HMRC issued a PLN to Ms Adeosun as a director of NNN being some 93% of the penalty charged to NNN on HMRC’s alternative view. The notice advised Ms Adeosun of her right to request a statutory review or make an appeal to the Tribunal within 30 days of the date of the notice.
On 17 April 2024, NNN entered into an alternative dispute resolution process with HMRC in respect of the VAT Appeals. On or about this time NNN had appointed Mr Kaney of X-VAT Limited as its adviser on the ADR process but Mr Pervez remained in the background. During the ADR meeting Mr Kaney realised that the penalty notices and the PLN had not been appealed and said that he intended to rectify this.
On 07 May 2024, Mr Kaney on behalf of NNN and Ms Adeosun appealed to the Tribunal in respect of the penalty notices and the PLN respectively (“the Penalty/PLN Appeals”). In the notices of appeal it was stated that the appeals were late due to “a technical oversight by the taxpayer’s accountant”.