TC09583 - [2025] UKFTT 00865 (TC)

The parties agree that the Assessments have been issued in purported exercise of the powers provided in paragraph 4 Schedule 8 FA 17. That paragraph provides for HMRC to assess where, for any accounting period for which a person is liable to account for SDIL, an ascertained amount of SDIL has become due from that person.

We are invited by HMRC to construe this provision as enabling them to assess for the SDIL which was reported on the relevant returns, but which was not paid by the Appellant as the total amount payable on the return was incorrectly calculated with the acknowledged liability to SDIL having been impermissibly reduced by credits to which the Appellant was not entitled.

Having concluded that the liability to pay SDIL following the submission of a return is limited to the “total amount” shown under “Return sent” as calculated after the netting off of credits claimed, we are satisfied that HMRC’s interpretation of their assessment power is correct and that it enables them to deny the effect of an incorrectly claimed credit by way of assessment. In accordance with the statutory infrastructure of the regime, the Appellant was liable to account for SDIL period by period by reference to the chargeable soft drinks imported and was not entitled to the credits claimed; as such, the SDIL recorded in the accounts and on the return was due, but because the returns had incorrectly included claims to credit, the SDIL due had not become payable and was not paid. Paragraph 4 Schedule 8 FA 17 requires only that ascertained amounts are established as having become due in order to access the assessment provision. In each period in which the Appellant claimed credit to which it was not entitled and/or reduced the SDIL due (and thereby payable) in an accounting period as a result of carried forward credit we are satisfied that HMRC had the power to assess.

HMRC raised the Assessments for account periods ended: 31/12/2018, 31/03/2019, 30/09/2019, 31/12/2019, 31/03/2020, 31/12/2020, 31/03/2021 and 31/12/2021. We are satisfied that for those periods HMRC have reduced the claim to credit to nil and thereby withdrawn the credit.

The credits for periods in which no SDIL was declared have not been similarly withdrawn by way of the Assessments and we have concluded that through a failure to draft and have enacted a specific power to withdraw/assess for periods where there was no amount of SDIL due in the period HMRC have no means of removing the credit balance because for those returns there is no SDIL which becomes due when the credit is withdrawn. However, without a free standing power to withdraw it is our view that the credits claimed in periods in which there was no SDIL due remain on the Appellant’s account capable of being set against amounts of SDIL falling due in later periods. The effect of our conclusion is set out in the table below: