In Kingsley Douglas v HMRC UKUT 0163, the Upper Tribunal (UT) dismissed the appeal against ‘best judgement’ VAT assessments upheld by the First Tier Tribunal (FTT). The UT found all the evidence had been properly taken into account by the FTT.

  • HMRC raised VAT assessments for a number of quarters between 08/09 and 12/13 totalling over £140,000.
  • The assessments were made under section 73 VATA 1994 whereby HMRC can assess VAT amounts to the ‘Best of their judgement’ where it appears a return is incomplete or incorrect.
  • HMRC considered that Mr Douglas did not have till rolls relating to sales made in his business, the operation of three shops.
  • HMRC concluded that they did not have the underlying records with which to verify the figures declared on the VAT returns for the periods.
  • HMRC then carried out a business economic exercise which formed the basis of the 'best judgement' assessments.

Mr Douglas Appealed to the FTT who determined:

  • HMRC was correct that in the absence of full records a business economic exercise was appropriate.
  • HMRC had fairly considered all of the available material and arrived at a decision that was reasonable and the tax due was not arbitrary.
  • Mr Douglas had not demonstrated that the assessments were wrong.

The UT dismissed Mr Douglas' appeal finding that:

  • The FTT had correctly applied the two key principles when considering a ‘best of their judgement’ assessment in concluding:
    • HMRC assessed the amount of VAT due ‘to the best of their judgement’.
    • The FTT did not have grounds for changing the quantum of the assessment.
  • The judge's notes from the FTT were inconsistent with the appellant’s position that a specific agreement had been reached with HMRC. The judges' notes were viewed as fact and the appeal on this ground failed as the proper procedure had not been undertaken to challenge the notes.
  • The FTT had considered all of the evidence in the round, including the evidence that was relied upon by the appellant.
  • The FTT had taken the evidence properly into account and it was not for the UT to interfere with the FTT evaluation of that evidence.

Useful guides on this topic

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?

How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Kingsley Douglas v HMRC UKUT 016  


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