“36. Although we accept that HMRC were working with limited information we find that they considered only one aspect of that information and did not demonstrate whether that one aspect was supported by other information which they stated that they had in their possession. Whilst it is not up to HMRC to carry out exhaustive investigations in order to establish upon which to base an accurate assessment, they should not ignore material in their possession in determining whether their assessment is reasonable. 37. We find, therefore that HMRC’s assessment was not made to best judgment; HMRC selected a particular entry from each of the accounts on which to base their assessment and did not use other material in their possession to confirm whether or not it was reasonable to base the assessment on that accounts entry. 38. We have borne in mind the caution in Pegasus Birds but consider that, in this case, HMRC have simply guessed that the losses in the accounts must be under-declared sales. Whilst some element of guess-work is inevitable in assessments, we consider that HMRC must, in exercising best judgment, use any other information available to them to consider whether that information supports that element of guess-work. They have not done so in this case and for the reasons set out above, the assessments to VAT are not to best judgement and so cannot stand as they are.” 54. Judge Fairpo allowed the appellant’s appeal but directed HMRC to consider whether, in the light of the evidence produced at the hearing, a new VAT assessment should be issued and in the absence of agreement between the parties the matter should be brought back before the Tribunal for determination. 55. In the First-tier Tribunal decision of Golden Cube Limited v The Commissioners for Her Majesty’s Revenue and Customs TC/2016/05440 Judge Jonathan Cannan stated at paragraph 4: “4. In the light of Pegasus Birds, the principal issue on the appeal therefore is whether the Assessment is excessive. The burden is on the appellant to satisfy me on the balance of probabilities that the Assessment is excessive. The appellant contends that standard-rated and zero-rated supplies have been properly identified and output tax correctly accounted for. Mr Watson submits that the Assessment should therefore be reduced to nil. Mr Gareth Hilton who appears for the Respondents seeks to maintain the Assessment. 56. And at paragraph 32 he said: “32. Mr Hilton for HMRC accepted that there may be three reasons for differences in the proportions of standard-rated sales between the invigilation days and the previous returns: (1) Deliberate manipulation of the records. (2) Mistakes in the recording of standard rated sales, either in the till entries, in the till programming or in the transfer of figures from the till records to the returns. (3) The three days of invigilation are not representative of the previous periods. 57. Judge Cannan allowed the appeal by the taxpayer being satisfied that the assessment was excessive and that there was no understatement of standard-rated sales by the Appellant. 58. In the First-tier Tribunal decision of Sital Khimji[2020] UKFTT 22 (TC) Judge Gething in allowing the Appellant’s appeal said at paragraph 15: “15. We consider the assessment made by the Officer in this case cannot be regarded as a best judgment assessment which according to Woolf J in Van Boekel is one which requires an " honest bona fide judgment by the Commissioners on the material before them of the amount of tax due" and that the "Commissioners will fairly consider all material placed before them and, on that material, come to a conclusion which is reasonable and not arbitrary as to the amount of tax which is due". In a case such as this in our opinion would require the commissioners to take into account the nature of the Appellant's business, the known facts about the trading conditions including the date of commencement, the existence of any competitors, the split between standard and zero rated supplies, the split between card and cash sales and any other special factors brought out in the enquiry. A blanket approach can never be a best judgment assessment.” 59. Finally in Wei Xian Peng and Qian Hong Peng t/a Zhu Guang Restaurant v The Commissioners for Her Majesty’s Revenue and Customs[2020] UKFTT 177 (TC) Judge Gething again sitting in the First-tier Tribunal made the following observations: “32. The Appellants consider that the assessments cannot be best judgment assessments, because although there may have been grounds of suspicion of suppression there has been no reliable evidence of suppression, and rely on the case of Hamid Forati & Patricia Forati (trading as Emilio's) v HMRC [2001] FTT at [34] and [35] and invite the Tribunal to discharge the assessments in full. 33. In Forati , at [34] the Tribunal accepted that the officer of HMRC had grounds for suspicion of deliberate suppression of turnover. There was an admitted history of poor record keeping and consequential under declarations. The officer acted in good faith in observing the restaurant, carrying out those observations and subsequent calculation. The burden is on the appellant to show the Tribunal that the observations cannot stand. Tribunal found that the Appellants had discharged the burden. Judge Bishopp said at [35]: " For the reasons we have already given, we cannot accept that the records of observation have the degree of reliability properly to be expected if they are to form the basis of an assessment. On the contrary, we have real doubts whether what the officers observed was accurately recorded. The limited or even sketchy amount of information the logs contained, the heavy reliance of memory to determine whether callers had remained on the premises for a long or short period, the absence of any annotations regarding staff members and the fact that the officers were simultaneously observing another restaurant, all give rise to significant misgivings about the reliability of the records. … This is not a case in which we are satisfied that there was suppression, but of a lesser amount than that assessed, and in which we should endeavour to determine the correct amount ourselves. Rather we are satisfied that there is no reliable evidence of any suppression. " 34. The totality of the HMRC's case involves: (1) A comparison of the card to cash ratio of sales on a very small sample of days with the same ratio in a prior period, and (2) Their own imperfect observations whilst dining in the restaurant. 35. The changed ratio is not evidence of anything other than sales ratios change. It is not evidence of suppression. To treat that as a basis to assess over£87,000 of under-declared VAT is absurd and would result, if taken to its ultimate conclusion, in every business with varying sales, to be guilty of suppression. 60. Judge Gething allowed the taxpayer’s appeal in part after applying the Wednesbury reasonableness test to the best judgment assessment. discussion 61. While the Tribunal had the benefit of having received skeleton arguments from both parties before the hearing we were only given the bundle of documents at the start of the hearing. We therefore had no time to study all 498 pages. During the evidence given by Mr Kenneway no reference was made to the invoices from Kelly Fuels referred to in paragraph 36 above or to the invoices from Woods Fuels Ltd referred to in paragraph 37 above. No copies of any of these invoices were in the bundle. 62. In his evidence Mr Bingham stated that he had calculated the under-declaration by assuming that there were sales of 350 litres of diesel per hour on each day from Monday to Saturday yet the filling station is only open for twelve and a half hours on Saturdays. His calculations therefore immediately gave rise to an error even if his other assumptions were correct. 63. The filling station has four pumps. According to Mr Bingham’s calculations the volume of diesel sold per hour was as follows:9 June 2016 364.2500 litres per hour based on four hours’ invigilation16 June 2016 270.0000 litres per hour bases on four hours’ 55 minutes invigilation28 June 2016 409.1860 litres per hour based on five hours’ invigilation11 January 2017 375.2000 litres per hour based on 58 minutes’ invigilation22 June 2017 528.6563 litres per hour based on one hour 38 minutes’ invigilation 64. Four of the five invigilations were carried out during the morning with only one in the afternoon. Three of the invigilations were carried out on the same day of the week - Thursday (9 and16 June 2016 and22 June 2017 ). No invigilatioins were carried out at the weekend. A total of 16 hours and 31 minutes was spent invigilating. The filling station was open for a total of 97 hours each week. It is situated on the main road from the city of Lisburn to the town of Moira relatively close to a junction with the M1 motorway. 65. HMRC’s tax assessment of£686,054.00 implies sales of diesel totalling£4,116,324.00 over the assessed quarters 08/15 to 10/17 - a period of 29 months or 792 days. This would require the Company to receive an average of£5,197.38 every day in cash in addition to the declared takings. decision 66. HMRC produced no evidence and made no claim that the Company operated any other bank accounts other than the Santander bank account and Bank of Ireland debit/credit card account included in the papers before the Tribunal. Mr Cunningham stated that he had seen no evidence of a separate bank account and had not seen any evidence of the pumps being tampered with 67. Mr Bingham did not explain why he calculated the average undeclared volume of diesel sales on the same basis for weekdays and Saturdays even though the filling station opens for a shorter period on Saturdays. Nor did he explain why he estimated Sunday sales were exactly half of weekday sales. 68. While the three witnesses for HMRC all indicated their contracts of employment did not allow them to work in the evenings or at weekends, this does not mean that HMRC can simply rely on their observations made during their permitted working hours. There was no evidence before the Tribunal in relation to evening and weekend sales. 69. Mr McGeown both in his oral testimony to the Tribunal and in his written statement confirmed that nobody had directed him not to log sales in the tills or not to record or declare cash sales. This was confirmed by Ms Megaw in her written statement though Ms Brown did state that HMRC did not accept her witness statement as she was not present to be cross-examined. 70. We note Mr Justice Carnwath in Rahman states that it is necessary for this Tribunal to find that HMRC’s assessment is a “spurious estimate or guess in which all elements of judgment are missing; or is wholly unreasonable.”