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.