In FW Services Ltd v HMRC [2020] TC 07636, the First Tier Tribunal (FTT) concluded the ‘best judgment’ assessment made by HMRC was excessive in the absence of supporting evidence.  

On 6 June 2018 HMRC issued assessments to FW Services for under-declared fuel sales.

  • The assessment of £686,054 implied sales of diesel totalling £4,116,324 over the assessed quarters 08/15 to 10/17. This was a period of 792 days which meant an average of undeclared £5,200 every day.
  • FW Services denied that they under-declared sales and the assessment was grossly inaccurate and baseless.
  • FW Services appealed to the FTT.

In making the decision the FTT found a number of errors in the HMRC officer’s assessment. These included:

  • There was no evidence supporting the evening and weekend sales estimates. HMRC calculated the average undeclared volume of diesel sales on the same basis for weekdays and Saturdays even though the filling station opened for a shorter period during the weekends.
  • Sunday sales were estimated at half of the weekday sales but this still did not reflect the volume of trade.
  • HMRC officers had not seen any evidence of the pumps being tampered with, nor any off-record bank accounts.
  • Witness statements from two employees also showed no evidence of unrecorded sales.

In the absence of any evidence that FW Services’ receipts were understated, the FTT concluded the assessment was excessive and it was reduced to zero.


Assessments: Best judgement
What is a 'best judgement' assessment for VAT? When can HMRC raise one? What are your rights of appeal? How do you displace a best judgement assessment?

Best judgement assessment: scaffolders' VAT penalties reduced by £387,000
In M Hodges v HMRC [2015] a taxpayer successfully reduced VAT penalties of £394,694 to £7,807. He was found guilty of dishonesty however HMRC had failed to exercise 'best judgement' in assessing the VAT penalties as required by the law.

External links

FW Services Ltd v HMRC [2020] TC 07636