Mirza Shahary Baig v HMRC

Mirza Shahary Baig v HMRC

Aug 27, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases | 0 comments

The Appellant was a retailer of dresswear and equestrian apparel. He had no shop, but operated from his domestic premises. He sold to market traders and primarily received cash as payment. He had been VAT registered since May 2000. Selected for a pre-credibility check mainly concerned with input tax the visiting officer discovered problems with input tax calculation and when these were resolved, the officer believed that the input tax had been overdeclared, following adjustments by £259,845, plus interest and a penalty of £82,198.20. The behaviour that led to the assessment was considered deliberate allowing the assessment to go back to September 2000. The appeal was made on the basis that the assessment was not to best judgment and that the Appellant’s explanations were ignored. Effectively the Tribunal decided that the performance of the business was not accurately reflected by the VAT returns and that the regular VAT repayment returns were erroneous. As a result the Tribunal supported the assessments as being reasonable and the scale of the penalties. All aspects of the appeal were dismissed. 

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11758/TC07800.pdf 

Clearly this case is a stark reminder that if HMRC believe deliberate behaviour has led to a tax loss they can seek out the missing tax back in the mists of time up to twenty years before. This Appellant tried to appeal the best judgment nature of the assessment, but the strong case law in HMRCs favour means that this is always a high hurdle to try and clear.

Mirza Shahary Baig v HMRC

Withington FFC Services Limited (A) and NNS Services Limited (B) v HMRC

Aug 27, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases | 0 comments

Co A sold a fried chicken business to Co B and the transaction was treated as transfer of a going concern. HMRC visited and issued a compulsory registration for Co B as the turnover was threshold for VAT registration at the time the TOGC took place. Co A were also assessed for the period when they should have been registered. However, their appeal was struck out on the basis that that the Tribunal had no jurisdiction to hear the case, because no return had ever been made by Co A. Co B lost its appeal. 

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11759/TC07801.pdf 

This case highlights the due diligence that should be carried out when you are considering buying a business, particularly a catering business, as a transfer of a going concern.

Mirza Shahary Baig v HMRC

Anthony John Preston v HMRC

Aug 27, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases | 0 comments

This case was decided on the papers in the First-tier Tribunal (Tax). This was part of the Covid-19 protocol and it meant that there was no hearing with the parties present.  The Appellant had submitted a self-assessment tax return but had not sufficient funds to meet the tax that was due. The Appellant had appealed against three penalties. Because one of the penalties was issued after a time to pay agreement had been put in place, effectively deferring the tax due, the penalty was cancelled by the Tribunal, however other penalties issued prior to the time to pay agreement were upheld on the basis that at the time they were issued the tax was unpaid and the Appellant did not have a reasonable excuse for the insufficiency of funds that led to the problem. 

This highlights that insufficiency of funds is not a reasonable excuse in itself for non-payment of tax and the penalties that may follow. To claim a reasonable excuse the taxpayer has to evidence an extraordinary event, the cause of which is outside their control that could lead to the funds not being available to meet tax liabilities. 

https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKFTT/TC/2020/TC07810.html&query=(anthony)+AND+(john)+AND+(preston) 

As the case was decided on the papers, the Appellant did not “have his day in court”. A decision on the papers will speed getting a judgment up, but where there is a lot of evidence that needs explaining so as to establish context this type of resolution may not be in the interest of the taxpayer. Clearly, the Tribunal has to try and prevent backlogs of cases rising due to Covid-19, but Appellants should consult with their representatives to ensure that a non-hearing is right for them.

Mirza Shahary Baig v HMRC

Payne v R & C Commrs [2020] BTC 19, in the Court of Appeal (“Coca Cola” van case)

Jul 29, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases, HMRC, Tax Tribunal Cases | 0 comments

This is the third time this appeal has been before the Judges with the Appellants losing most of their points at the First and Upper Tax Tribunals. It has been, and remains, a difficult case for the layperson to follow what all the fuss is about. The point at issue is whether a panel sided vehicle was a van or a car. The employees worked for Coca Cola. The Judges decided that all three vehicles were cars. Car Benefit in Kind tax charges are usually a lot higher than van Benefit charges, hence the problem. Companies should take advice if there is any doubt about a vehicle. Will this appeal go to the Supreme Court?

Mirza Shahary Baig v HMRC

Jones v R & C Commrs [2020] BTC 556, in the Upper Tax Tribunal (“UTT”)

Jul 29, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases, HMRC, Tax Tribunal Cases | 0 comments

This was an appeal against an FTT decision. Jones’ termination payment from her employment was under investigation and appeal. The UTT decided differently to the First Tier, and said that HMRC had failed to prove the culpability of Jones and hadn’t established carelessness or deliberate conduct. Therefore the Discovery Assessments should not have been issued. The UTT didn’t remit it back to the First Tier and allowed the appeal. The case confirms that HMRC has to prove culpability when issuing Discovery assessments.

The case of K E Entertainments Ltd [2020]

The case of K E Entertainments Ltd [2020]

Jul 28, 2020 | First Tier, Upper Tribunal and Court of Appeal Cases | 0 comments

K E Entertainments Ltd [2020] was a case relating to the recovery from HMRC of overpaid VAT in relation to supplies of Bingo, where the tax treatment of the supply had changed. The taxpayer tried to recover all the tax overpaid, over a considerable period of time, but the court stated that they could not reclaim anything beyond the “four year cap”, allowed by the VAT Act. The lesson here is that if you discover non reclaimed VAT or overpaid amounts, then making a reclaim as early as possible, is very important, because if the claim is over four years old, then it is highly likely the money will not be recovered.