TC09555 - [2025] UKFTT 00748 (TC)

Fecha: 09-May-2025

Parties submissions

Parties submissions

83.

3KH challenge best judgment for the following reasons:

(1)

Taking the number of customers counted and the average spend per head by the officers on covert observations 3KH say that the sum assessed in inherently implausible.

(2)

The VAT Assessment assumes a continued and constant suppression rate throughout the period of the period 10/13 to 04/17 despite a change in management occurring in April 2015.

(3)

The apparent increase in cash sales post 26 August 2017 is explained by reference to the evidence summarised in paragraphs 29 to 33 above.

(4)

Further Officer Beard chose to use an unrepresentative 17-day period (26 August – 11 September 2017) to conclude that there was a significant increase in cash recorded prior to 25 August 2025, a full consideration of the new till data shows a progressive increase in cash taking consistent with the evidence regarding the availability of the full banqueting facility from July 2017.

(5)

Having accepted the card to cash ratio demonstrated post 26 August 2017 on the new till there can be no basis for an uplift to be applied to later periods. The declared takings must be accepted.

84.

3KH advance a submission that Officer Beard had essentially acted capriciously. As regards the assessments for the period prior to August 2017 it was said that he failed to take account of relevant evidence that did not support his conclusion that there was suppression, including in particular the test eat data. Further, he failed to gather evidence that was readily available to him i.e. he could have counted customers dining at TSM on each of his visits such a count could then have been a measure by reference to which the plausibility of the assessment values could be tested.

85.

It was also said that Officer Beard’s mindset was to find suppression and assess for the maximum possible VAT that could have been due and then leave it for the Appellant to disprove. Counsel for the Appellant contended that such a mindset was confirmed from an answer given by Officer Beard in cross examination. As far as our notes of the hearing record he was asked in connection with refunds (a matter not in fact in dispute as the Appellant accepts that the two large items identified as refunds should properly be subject to VAT) “were there only two examples”. His response was “yes, I didn’t have access to the old till. I would have loved to have found evidence of refunds on the old till”. It was put to him that this indicated bias, but Officer Beard clarified that he would simply have liked access to the old tills but had been denied access through non-production of the till data.

86.

It was claimed that for the post August 2017 assessments it was not open to HMRC to assess on the basis of a demonstrated and declared card and cash ratio as it had been calculated on the basis of accepted declared sales.

87.

With regards to the assessments made in respect of the sums said to have been taken at TSL, 3KH challenged Officer Beard’s use of the card cash ratio for a successor business on the basis of relevance.

88.

The best judgement of the input tax aspects of the assessments were challenged on the basis that the annual accounts had been used and an assumption made that there was no capital expenditure.

89.

HMRC contend that the approach taken by Officer Beard when raising the assessments meets the test as set out by the Upper Tribunal in Sintra.