Conservatory Insulations Northwest Limited v The Commissioners for HMRC [2025] UKFTT 705 (TC)

[2025] UKFTT 00705 (TC)Case No TC09553
FIRST-TIER TRIBUNAL
TAX CHAMBER
Date Judgment date: 12 June 2025
Between
CONSERVATORY INSULATIONS NORTHWEST LIMITEDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondent
Location: Decided on the papers
Appeal reference: TC/2023/16328
VALUE ADDED TAX – error correction submitted to HMRC by Appellant – assessing officer completing relevant form within one year of submission but assessment counter-signed more than one year after submission – whether assessment “made” within one year of evidence of facts sufficient to justify the making of the assessment – no
Decided by:
TRIBUNAL JUDGE BAILEY
The Tribunal determined both the Respondents’ application to strike out this appeal and the substantive appeal, on 6 June 2025, without a hearing having first read the Notice of Appeal (with enclosures) filed 27 October 2023, the Respondents’ Statement of Case filed on 25 January 2024, the Respondents’ application to Strike Out this appeal filed on 14 June 2024, and all other correspondence on the Tribunal file.DECISION

Introduction

[1]The appeal filed to the Tribunal (“FTT”) by the Appellant is against an assessment raised by HMRC as a result of an error correction notice having been filed by the Appellant. The assessment was issued to the Appellant on 22 July 2023, for the periods 09/19, 11/19, 02/20, 03/20, 06/20 and 03/21. The only issue between the parties is whether that assessment was raised within the statutory time limits.[2]HMRC applied for this appeal to be struck out on the basis either that the FTT did not have jurisdiction or there was no reasonable prospect of the Appellant’s appeal succeeding. The FTT directed that both the strike out application and (if the strike out application was unsuccessful) the substantive appeal, be heard on the papers.

Outcome

[3]For the reasons set out below: - HMRC’s application to strike out this appeal is REFUSED; and - the Appellant’s appeal against assessment is ALLOWED.

Background facts

[4]On 15 July 2022, the Appellant’s agent filed an error correction notice with HMRC on behalf of the Appellant. This error correction notice was for the VAT periods 09/19, 11/19, 02/20, 03/20, 06/20 and 03/21. The agent explained the reasons for the error and outlined the steps put in place by the Appellant to avoid any such errors in future. Attached was an appendix setting out the corrected figures for each of the affected periods.[5]The Appellant’s error correction notice was acknowledged by HMRC on 15 July 2022. This was an automatically generated acknowledgment email. It seems that HMRC then lost or misfiled the error correction notice that they had received.[6]On 22 May 2023, the Appellant’s agent emailed HMRC to provide a further copy of the error correction notice. This followed a telephone call from the agent to HMRC, to enquire about progress, in which the agent was told HMRC had no record of the error correction submitted.[7]On 27 June 2023, HMRC Officer Maddison completed form V642. The calculation date was entered as 22 May 2023, the date on which the Appellant’s agent had supplied a further copy of the error correction. I am satisfied that HMRC accepted the Appellant’s calculations in full, and no further information or explanation was required from the Appellant.[8]Within form V642 is a table that shows the detail entered by Officer Maddison in respect of the assessment raised upon the Appellant. In the table there is one line for each relevant VAT period. A column shows the “attribution code” for each VAT period is “1”. A further column shows the amount “Due to HMRC” for each VAT period. The next column (the amount “Due from HMRC”) is blank. There is then a column headed “T”, where Officer Maddison has entered the code “2”. There are then three columns left blank, headed “BT”, “PPR” and “Sus”. The final two columns are headed “Pen” and Int”, and above both of these columns is the further heading “Inhibit”. The Penalty column has the code “1” for each period; the Interest column has the code “0” entered for each period.[9]HMRC’s published guidance VAEC8820 explains that code 1 in the “attribution code” column means that the Appellant made an input tax error. VAEC8820 explains that the amount due to HMRC should have code 0, 1 or 2, but does not explain what those figures signify. The code in Column “T” is explained as being the type of assessment that should be issued; Officer Madison has selected “2”, which (by reference to VAEC8820) I understand to be an assessment where there was an under-declaration of tax and where there is a liability to interest. “BT” is Behaviour Type, “PPR” is Penalty Percentage Rate” and “Sus” is Suspension Code.[10]Finally, VAEC8820 explains the following when inhibits are being set: Penalty inhibit …• For periods which are subject to Schedule 24, the field must be completed as follows:• 0 – inhibit not set. This code should be inserted for all over-declarations and, subject to the following bullet, all under-declarations.• 1 – inhibit set. The inhibit may be set temporarily, for example when a case is being referred under the evasion referral procedure but a tax assessment needs to be raised as the period is going out of time for assessment purposes. This is likely to occur very infrequently.• N.B. The authorising level for penalty inhibits should be at least one grade above that of the officer setting the inhibit. Interest inhibit An interest inhibit code must be inserted for each line, see VDIM7000 and VDIM8050 for full guidance on setting inhibits:• 0 – inhibit not set. This code should be inserted for all under-declarations and over-claims where interest should be assessed. This code is also usually used for over-declarations but see below.• 1 – inhibit set. This code should be used for over-declaration on which statutory interest has been paid, see VSIM7800 … This code should also be used for under-declarations and over claims where interest is not to be assessed.[11]VAEC8820 makes it possible to understand that, by the codes he entered on form V642, Officer Maddison had chosen to inhibit the issue of a penalty but he did not inhibit interest.[12]The notes for the form V642 on HMRC’s systems show the following: How signatory verified - Authorised agent Periods applicable - 09/19, 11/19, 02/20, 03/20, 06/20, 03/21 Reason for error - Incorrectly claimed input tax If interest inhibited, why - N/A Box 6-9 adjustments required - Any other relevant information - N/A[13]I find, on the balance of probabilities, that this information in the notes section was entered by Officer Maddison.[14]The notes show that form V642 was passed to Officer Errington. As there is no witness statement from Officer Maddison (and, obviously, no oral evidence), I do not know the date on which form V642 was passed to Officer Errington, and I am not told Officer Maddison’s reasons for passing form V642 to another officer. Having regard to VAEC8820, I find, on the balance of probabilities, that Officer Maddison passed the V642 to another officer because he was following the guidance in VAEC8820 that an officer of a higher grade was required to authorise the penalty inhibit.[15]On 18 July 2023, Officer Errington counter-signed the V642. A couple of hours later, still on 18 July 2023, Officer Maddison created what is described as a “Tax Return form bundle”.[16]The next morning, on 19 July 2023, HMRC’s notes record that “ETMP authorised” by Officer Errington. In the absence of witness evidence to better explain HMRC’s internal notes, I find on the balance of probabilities that ETMP stands for Enterprise Tax Management Platform. As explained by Sir Jim Harra in an HMRC corporate report published on 13 February 2025: The Enterprise Tax Management Platform (ETMP) is the strategic technology backbone of HM Revenue and Customs’ (HMRC’s) tax accounting and payment capability. It currently administers over 40 tax regimes, with all remaining tax regimes expected to migrate onto the platform in due course. ETMP provides returns processing, tax accounting, payments functionality and data mastery in one system and is accessed by approximately 40,000 users across HMRC daily. It handles over £800 billion of tax revenue and payments annually.[17]In the absence of any other explanation provided by HMRC I find, on the balance of probabilities, that ETMP is the digital platform through which HMRC issue VAT assessments.[18]On the basis of the notes for the form V642, I find that on 19 July 2023, Officer Errington authorised the raising of an assessment on the Appellant. Such assessment included interest (from the adjusted date selected by Officer Maddison) but there was no penalty assessment.[19]On 22 July 2023, HMRC notified the assessment to the Appellant. This included a VAT Statement of Account, dated 22 July 2023, which stated: We have made assessments of tax, surcharge, penalty and interest, where appropriate and adjusted for any over-declarations of tax. As a result, your VAT account at 22 July 2023 shows the following: Tax £54,468.00 Interest £5,044.83 The total balance now is £59,512.83 Please pay any amount due immediately.[20]The accompanying VAT notice of error correction had a stated “date of issue” of 22 July 2023. The text of the notice provided: Thank you for telling us about your tax liability. We have made assessments for tax and interest, where appropriate, and/or approved VAT credits for over-declarations for the period or periods shown on page 2 onwards. … Summary Date of calculation: 21 May 2023[21]I find that the date of calculation was not (and could not have been) 21 May 2023, as stated. That is because, on 21 May 2023, HMRC were still unaware of the error correction that had been submitted on 15 July 2022. I find that the date of the calculation was either 22 May 2023 (the date on which the agent provided a further copy of the error correction notice) or 27 May 2023 (the date on which Officer Maddison began completion of the V642).[22]On 16 August 2023, the Appellant’s agent sought a review of the assessment raised, on the basis that the assessment dated 22 July 2023 was made out of time. The agent also challenged the imposition of interest.[23]On 28 September 2023, HMRC issued their review decision that the assessment should be varied to remove the interest (subject to its potential re-imposition when calculated from a different start date). In this review decision HMRC considered that the assessment was raised on 27 June 2023 (the date on which Officer Maddison had entered data into form V642).[24]On 13 October 2023, the Appellant’s agent emailed HMRC. In this email, the agent referred to HMRC’s guidance at VAEC1120. That guidance provides: The VAT Act 1994 prescribes time limits only for the making of an assessment. It does not prescribe time limits for the notification of an assessment. It is policy that notification should be done quickly, but delays in notification can occur due to localised and administrative difficulties. Problems arise when an assessment is made close to the time limit for assessing. An officer may make an assessment in time but it may not be notified until later. HMRC have faced a number of challenges in this area in the past. Therefore, HMRC as a matter of published policy, rely on the date of notification of an assessment as the material date for time limit purposes. It is therefore essential that assessments are notified within the statutory time limits prescribed in the VAT Act for the making of assessments.[25]The agent noted that the assessment had been notified after one year, and asked for an explanation of why HMRC appeared to have departed in the Appellant’s case from their published policy of treating the date of notification as the date of assessment. The agent also referred to VAEC6080 which provides: HMRC’s view of the law is that the making of the assessment for the amount of tax due and its notification to the taxpayer, by either a manual assessment notification or a computer produced form VAT655, are separate and distinct operations This is based on the wording of Section 73(1) (2) and (9) VAT Act 1994. The VAT legislation prescribes time limits only for the making of an assessment. It does not prescribe any time limits for the notification of an assessment. In the past HMRC defended assessments where we could demonstrate that we had made an assessment, i.e. finished quantifying the amount and had taken the decision to assess, before the time limit for the making of the assessment had expired, although it may have been notified at a later date. However, it is clearly undesirable that our time limit rules should attach to a made date which is neither obvious or routinely disclosed to taxpayers. Consequently, all assessments must have be notified to the taxpayer within the time limit for making the assessment in order to demonstrate that it was indeed made in time. Any detrimental revenue affect of using the notification date for time limit purposes is relatively insignificant and more than compensated for by the removal of contentious litigation surrounding the made date. In cases where there is a danger that an assessment may go out of time whilst awaiting the VAT641 to be processed, it will be necessary to notify the assessment by letter, see specimen letter VAT(LC)16: General VAT assessment letter (live trader) available on SEES.[26]The agent asked for information and more detail, including the dates on which the assessing officer and counter-signing officer had completed, checked and dated the V642 form. The agent asked for a response prior to the deadline for the Appellant to appeal to the FTT. It seems that no response was received by this date.

Procedural history before the Tribunal

[27]On 27 October 2023, the Appellant filed an in-time appeal with the Tribunal.[28]Late on 25 January 2024, HMRC filed their Statement of Case. In this Statement of Case, HMRC asserted that the burden was on the Appellant to demonstrate that HMRC incorrectly issued the assessment. HMRC referred to Section 73(6) and 77(1) of VATA 1994 which set out the assessing time limits, and relied upon Babber t/a Ram Parkash Sunderdass v CCE [1991] BVC 789 as supporting their argument that the assessment had been made on 27 June 2023, even though it was not notified until 22 July 2023.[29]On 19 February 2024, the Appellant’s agent emailed HMRC making the point that Babber supported the argument that an assessment was made when it was checked and counter-signed, and asking HMRC to reconsider their position. On 29 February 2024, HMRC responded to the Appellant’s agent: Having made several internal enquiries, I can confirm that HMRC’s position remains unchanged. I have been advised that HMRC intend to rely firmly on the date the assessment was made, not notified. HMRC consider the counter signatory element to be irrelevant as the assessment was made first. Additionally, counter signing is considered to be an internal process.[30]On 8 March 2024, the Appellant filed both its List of Documents and detailed submissions in support of its case. In a covering email the Appellant noted that there was only one point in issue, and it requested that it be considered on the basis of paper submissions to save costs.[31]On 29 May 2024, HMRC were asked if they objected to a decision on the papers. If they did not object, HMRC were further directed to provide a bundle that included legislation and case-law referred to by either party.[32]In response, on 14 June 2024, HMRC filed an application to strike out this appeal. In this application, HMRC asserted: The Appellant made it clear that they wish to appeal on the basis of whether the assessments were “made” in time according to HMRC’s internal processes quoting internal guidance and policy. As HMRC’s internal processes are not set out in law, the Respondents contend that there is no right of appeal to internal procedures …[33]On 29 August 2024, Judge Brown KC noted that HMRC had not replied to the question of whether they objected to a paper hearing. The Appellant was directed to respond to HMRC’s strikeout application, and HMRC were directed then to make submissions on the Appellant’s response and the suitability of a determination on the papers.[34]On 9 September 2024, the Appellant filed brief submissions, indicating it considered that the Tribunal did have jurisdiction, and that it had a reasonable chance of success, so the appeal should not be struck out. These submissions were not copied to HMRC.[35]Judge Redston issued further Directions on 29 October 2024, requiring HMRC to respond to the Appellant’s further submissions. Judge Redston also directed that, if HMRC withdrew their strike out application, the appeal would be heard on the papers. If HMRC did not withdraw their application, that application would be heard on the papers, and if HMRC were not successful in that application then the judge would go on to decide the appeal.[36]On 11 November 2024, HMRC confirmed they wished to continue with their application to strike out this appeal.[37]On 8 January 2025, HMRC filed a bundle of authorities. Despite the original direction that HMRC should file one bundle, that included legislation and case-law, no documents were included in the authorities bundle, and no separate documents bundle was filed. After chasing by the Tribunal, HMRC filed a bundle of documents with the Tribunal on 21 January 2025.

The legislation relevant to the assessing time limit

[38]HMRC accept that this is not a situation where extended time limits can be relied upon. Therefore, the relevant time limits are set out in Sections 73 and 77 VATA 1994. The relevant parts of these sections provide: 73 Failure to make returns etc.(1) Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him. … (6) An assessment under subsection (1),(2) or(3) above of an amount of VAT due for any prescribed accounting period must be made within the time limits provided for in Section 77 and shall not be made after the later of the following— (a) 2 years after the end of the prescribed accounting period; or (b) one year after evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, comes to their knowledge, but (subject to that section) where further such evidence comes to the Commissioners' knowledge after the making of an assessment under subsection (1), (2) or (3) above, another assessment may be made under that subsection, in addition to any earlier assessment. 77 Assessments: time limits and supplementary assessments. (1) Subject to the following provisions of this section, an assessment under Section 73 or 76, shall not be made— (a) more than 4 years after the end of the prescribed accounting period or importation concerned, …

HMRC’s application to strike out this appeal

[39]As noted above, HMRC filed an application seeking to have this appeal struck out. In making this application, HMRC argue that the FTT has no jurisdiction and so the appeal must be struck out under Tribunal Rule 8(2)(a) or, alternatively, that there are no reasonable prospects of the Appellant’s case succeeding, so the appeal should be struck out under Tribunal Rule 8(3)(c).[40]The basis for both of these submissions appears to be HMRC’s stance that the assessment was made on 27 June 2023 (a point clearly not accepted by the Appellant) and the Appellant’s references to HMRC’s guidance. HMRC state in their strike out application that “there is no right of appeal to internal procedures”.[41]HMRC are correct that the FTT has no jurisdiction to consider matters that are more properly the subject of application to the Administrative Division of the High Court; for example, the FTT cannot consider arguments such as a legitimate expectation that HMRC would follow a published policy. However, the Appellant has made clear that the basis on which it is making this appeal is a challenge to the date on which the assessment was actually made. That is a combined question of fact and law. The FTT has jurisdiction to decide when the disputed assessment was made (just as it had in the many cases cited below). Therefore, HMRC’s application for this appeal to be struck out under Tribunal Rule 8(2)(a) is refused.[42]The second limb of HMRC’s application is made on the basis that the Appellant has no reasonable prospects of being successful. I do not agree that this is the case. The date on which the disputed assessment was made will be determined on the basis of the evidence before the FTT. It will rarely be appropriate for the FTT to prejudge its own conclusions before it has examined that evidence. That is particularly so when, as here, HMRC has the onus of proof. Therefore, HMRC’s application for this appeal to be struck out under Tribunal rule 8(3)(c) is also refused.

The substantive appeal

[43]Having refused HMRC’s application to strike out this appeal, I now consider the substantive appeal before the FTT.

The burden of proof

[44]In their Statement of Case, HMRC argue that in an appeal against an assessment, the onus of proof is upon the Appellant. Although HMRC do not cite any authority in support of their assertion, I accept that this general proposition has been confirmed by the Upper Tribunal in HMRC v Sintra Global [2024] UKUT 00346 (TCC) at paragraph 68 where it was said: … on an appeal against an assessment to tax, the general rule is that, unless the statute expressly or impliedly provides otherwise, the burden is on the taxpayer to show that the assessment is wrong and to establish the correct amount of tax that is due.[45]However, in Burgess and Brimheath Developments Limited v HMRC [2015] UKUT 578 (TCC), it was common ground that while the appellants bore the onus of proof in respect of the substantive issues, HMRC bore the onus of proof in relation to the competence and time limit issues. This was agreed by the Upper Tribunal who held: 43. In this case, therefore, HMRC had the duty of establishing their case on both the competence and time limit issues. The burden of proof lay on them in each of those respects. There was no obligation on the part of Mr Burgess or Brimheath to raise those issues. As Henderson J said in Household Estate Agents, in the absence of relevant evidence there is nothing to displace the general rule that discovery assessments (and we would add assessments outside the normal four-year time limit) may not be made. The provisions of s 50(6) TMA that have the effect that an assessment stands good unless the tribunal decides that an appellant has been overcharged by it, which leads to the burden being on an appellant to displace an assessment that has been validly made, do not affect this general rule as to the validity of the assessment.[46]While Burgess related to direct tax assessments, in Monmore Properties Limited v HMRC [2024] UKFTT 00137 (TC), which related to VAT assessments, both parties agreed that the general rule as to the validity of the assessment also applies to indirect assessments. In Monmore, the FTT noted:79. Burgess means, as both parties recognise, that the Tribunal must consider the validity of any assessment which has been appealed to it.80. …81. Both parties accept that as far as the timing and competency of assessments are concerned, firstly, HMRC bear the burden of proof and secondly that this Tribunal is bound by the Upper Tribunal in Burgess.[47]Therefore, I do not agree with HMRC that it is for the Appellant to show that the assessment was made out of time. If I am to confirm the assessment under appeal here then I must be satisfied that the assessment was validly made within time; the onus is on HMRC to demonstrate that.[48]The standard of proof is the balance of probabilities.

Discussion

[49]In brief, the parties’ positions are as follows: HMRC’s case is that the assessment was made on 27 June 2023. The Appellant disagrees, arguing that the assessment was not made until it was counter-signed (on 18 or 19 July 2023) or, alternatively, when it was notified (on 22 July 2023).[50]Both parties have referred to case authorities that they believe support their position. It is convenient to consider these in the order that they were decided, beginning with Babber t/a Ram Parkash Sunderdass v CCE [1991] BVC 789.[51]In Babber, which concerns events at a time when assessments were made in manuscript or type on three sheets of carbon paper, the VAT and Duties Tribunal had the benefit of oral evidence from the assessing officer, the checking officer and the counter-signing officer. The VAT and Duties Tribunal found as fact that the assessing officer had completed the relevant form on 1 September 1988, this had been checked (by a second officer) and counter-signed (by a third, more senior, officer) on the same day and a photocopy taken of the top part of the three sheet form. The three parts of the form had been sent on for processing but had been lost. The assessing officer had later realised that the copy that should have been sent to the appellant had not been issued, and he made some alterations to the photocopy of the original, added a date stamp of 11 November 1988, and issued that to the appellant. The appellant contended that 11 November was the date of the assessment, and that it was out of time. The VAT and Duties Tribunal decided the date on which the assessment had been made as a preliminary point. Given HMRC’s reliance upon this authority, it is worth quoting extensively from this decision: It was submitted by Mr Ewart [who appeared for CCE] that the original of the photocopy assessment was an assessment and that it was made on 1 September 1988 when the assessing officer exercised his judgment under para. 4(1) of Sch. 7 and decided on the amount to be assessed. He submitted that since the details of this assessment were fully recorded in the photocopy, that document should also be treated as the assessment. In his submission, the document was not a new assessment but was the document by which the earlier assessment dated 1 September was notified. Mr Ewart referred us to a number of authorities dealing with both income tax and VAT although we are not bound by the authorities relating to income tax. … That is the position relating to income tax but the procedure relating to VAT is different. The relevant form 191 is headed ‘Notice of Assessment’ and there are, in fact, three forms one of which is coloured white, one pink and the other yellow. They have carbon paper between them: they are similar to each other but not identical. The white one is the LVO copy and the pink one (which is in fact a VAT form 192) is a copy for the VCU and the yellow one is the trader’s copy. The letters giving the ‘Reason Code’ and the ‘Type Code’ should be inserted on the form 191 and details of the codes are set out on the back of the trader’s copy so that the trader can understand the grounds on which the assessment is made and the type of assessment. The yellow copy does not show the date on which it is signed by the assessing officer and countersigned by his superior officer. Mr Ewart submitted that the date on which the assessment was made is when the form is countersigned and dated and that is the date on which the superior officer checks the form and the figures and actually dates the form.[52]Pausing here, in the context of the current appeal, it is worth noting that the VAT and Duties Tribunal’s record of Mr Ewart’s submissions has changed in the space of a few paragraphs. It was originally said to be the date on which the assessing officer enters the figures on the relevant form – the position that HMRC argue for here. However, a few paragraphs further along, Mr Ewart is said to have submitted that the assessing date is the date when the counter-signing officer checks and signs the form – the position for which the Appellant here argues. The VAT and Duties Tribunal continued: Mr Ewart pointed out that the trader’s copy does not show the date of the signature, but only the LVO copy and the one which is sent to the VCU. In the submission of Mr Ewart the date stamp is the date of the notification which is affixed by the LVO immediately prior to its despatch as part of the ‘batching’ process. Evidence was given that in cases where the assessing officer is also an investigating officer of the investigation division there are slight differences in procedure, in comparison with an assessment which is made at a LVO, because once the form 191 has been countersigned and dated it is sent to the LVO and the investigation officer has nothing further to do with it. At that stage no date stamp has been impressed on any document. Mr Ewart submitted that the date on which the assessment was made and that on which it is notified need not be the same. … In relation to the making of VAT assessment both parties referred us to the decision of the Manchester Tribunal in Din & Anor t/a Indus Restaurant (1984) VATTR 228;(1984) 2 BVC 205,131. … … Mr Ewart submitted that the document containing the disputed assessment was the notice of assessment the date of which for the purpose of appealing was the date of its notification, which was the date of the date stamp. It was further contended by Mr Soares that on the making of the ‘second assessment’ on 11 November 1988 the original assessment merged therein and disappeared. … In view of the conclusions which we have reached and which are set out below, we do not consider it necessary to analyse these authorities in further detail. On this part of the appeal the questions for our decision are first on what date the commissioners made an assessment on the appellants in the sum of £81,748.81, and second whether, and if so on what date, the commissioners notified the appellants of this assessment. But the main question for our decision is whether this assessment was made out of time and ought on this account to be discharged. There is no statutory requirement that an assessment should be in any particular form, but it is provided by para. 4 of Sch. 7 to the Value Added Tax Act 1983 that once an assessment has been made it should be notified to the person concerned. The resultant practice has emerged that assessments are notified to a trader by sending him the trader’s copy of the form VAT 191. There is no doubt that this document contains the disputed decision and gives rise to a right of appeal. Having heard the evidence of Mr McElligott and that of Mr Clark we are left in no doubt that these officers exercised their discretion under para. 4 of Sch. 7 of the Value Added Tax Act 1983 when they decided the basis on which the assessment should be made (by reference to the schedules which had been prepared for the prosecution) and decided on the amount to be assessed. We also find that this decision was recorded in the original of the document which was a notice of assessment made ready for onward transmission to the LVO for batching and despatch to the VCU and to the trader. Mr Soares submitted that the date of the assessment was the date of the date stamp impressed at the time of batching, but Mr Ewart contended that it was the date on which the decision was recorded and countersigned. Mr Soares objected that if the latter was the correct date, the trader had no means of knowing the date of the assessment and whether or not it was out of time, because the trader’s copy bore no record of this date. Mr Ewart contended that this was not a serious objection: a similar point arose in relation to income tax where the right of appeal arose on the date of the notice of assessment. In his submission the right of appeal in VAT had to be exercised within 30 days after the date of the document containing the disputed decision of the commissioners which in his submission was the notice of assessment or possibly the date of a letter containing the actual decision to assess which might not be in the form of a notice of assessment. Although there is considerable force in the contention of Mr Soares, we reach the unanimous conclusion that date on which the assessment was made is the date on which the decision to assess is recorded together with the amount of the assessment and on which this record is countersigned and dated. In our judgment the assessment was, therefore, made on 1 September 1988 and is not out of time.[53]In Babber, the date on which the assessing officer entered the figures was the same as the date on which the counter-signing officer signed and dated the assessment. However, the VAT and Duties Tribunal make clear in that final paragraph (and earlier when they refer to the evidence of both the assessing and the counter-signing officer) that the date on which the assessment is made is the date on which the counter-signing officer signs the assessment.[54]Although HMRC state that they rely upon Babber, applying the analysis in Babber to the facts of this case, the date on which the assessment was counter-signed, and thus made, was 18 July 2023. This is more than a year after the Appellant’s error correction notice was submitted.[55]Chronologically, the next decision relied upon is Harris v CCE [1995] BVC 773, relied upon by the Appellant. In this case, the assessing officer had passed the completed form to his supervising officer on 13 December 1991, but it was not date stamped or signed by that officer. The date on which the assessment was notified to the appellant was 8 January 1992, but that was out of time. The VAT and Duties Tribunal decided: From Mr Morris’s evidence I understand that the officers’ assessment of Form 641 is provisional until it has been examined and approved. That accords with the tribunal finding in Babber. The Babber tribunal referred to countersigning and dating. Following Burford v Durkin [1991] BTC 9 I would not enforce such stringent terms if there was other evidence of the approval that would have led to a countersignature. In my judgment the assessment has not been made until it is at the stage when it simply requires clerical processing. That must be after supervisory consideration. Until then the commissioners have not made a decision and the assessed amount has not been finally determined. The supervisor may look at the file or consider the case with other officers including the assessing officer and then decide that an assessment is inappropriate or that the figure should be revised. Only when the supervisor is satisfied can it be said that the decision and amount are determined. Until they are determined there cannot be an assessment as prior to that time there is nothing to be processed. In the instant appeal this means that the assessment would be made when Mr Morris was satisfied. Ordinarily he would countersign the paper and date it. That would settle the date that the assessment was made. In this case he failed to sign or date the form. As stated above I do not regard that as a fatal flaw in the making of the assessment but it does create the difficulty of knowing the date when it was made. Mr Morris could not help, all he could say was that he passed it on to be processed on the computer. The only date on the form after it was signed by Mr Richards was that impressed by the keying operator, 8 January 1992. Thus Mr Richards prepared the form on 13 December 1991 and passed it to Mr Morris. Whether it went to Mr Morris immediately or not is not known. Neither is it known when Mr Morris first saw the form or the date when he considered it. All that is known is that it was in the hands of the keying operator who entered the information into the computer on 8 January 1992. There is no evidence of delays in the processing of documents by the operator and so on the balance of probabilities I determine that the officers’ assessment was approved by Mr Morris and passed to the clerical staff shortly before 8 January 1992. Allowing for the office being closed on 1 and 2 January 1992 (on which there is no evidence) there were three working days after 31 December 1991 and prior to 8 January 1992. I conclude that the form was not finally approved until January 1992. That is too late to enable the assessment to be made within the time specified in s. 22 of the Finance Act 1985. Accordingly the assessment is invalid. The appeal is allowed.[56]Thus Harris, relying on Babber, unsurprisingly reaches the same conclusion that an assessment is made when it is counter-signed.[57]In their application to strike out this appeal, HMRC also refer to Classicmoor Limited v CCE [1995] BVC 2352, a decision of the VAT and Duties Tribunal on a preliminary point, issued just three months after Harris. HMRC rely upon this decision as authority for the proposition that the making of an assessment and the notifying of an assessment are different stages (although I do not understand the Appellant seriously to dispute this). Having explained that distinction, the VAT and Duties Tribunal went on to state: 24. In my opinion therefore the assessment was ‘made’ when the commissioners through their officers carried out their assessment functions. The power to assess is given to the commissioners by, for example, para. 4(1) [of Sch. 7 to the Value Added Tax Act 1983] and the actual procedure for assessing is left to them. It is usually exercised in the privacy of the LVO. The procedure involves the taking of the decision to assess, followed by the completion of the officer’s assessment and concluding either with the signing by the assessing officer or, as here, with the countersigning by another officer. The act of assessment will have little effect, other than to satisfy the statutory time limits, until the taxpayer is notified in compliance with the concluding words of para. 4(1) and (2). Until notification the taxpayer is under no liability to pay; nor does the right of appeal arise. Once notification of the assessment is made the position entirely alters. The right of appeal arises and if it is not exercised the amount due becomes recoverable. I therefore find that the 1994 assessment was ‘made’ on 20 April 1994 when it was countersigned by the assistant collector.[58]In Cheesman (t/a Well in Tune) v CCE [2001] BVC 39, there are interesting comments about the distinction between the making and the notifying of an assessment. However, the issue was ultimately whether a March assessment or a September assessment had been notified. It was decided that the assessment that was notified was the September assessment, and that assessment had been made out of time. (In its detailed submissions the Appellant refers to the VAT and Duties Tribunal decision but there is no copy of that in the agreed bundle, and it has not proved possible to find a copy.)[59]Next in time, are the decisions of Eyesave Limited v CCE [2001] BVC 4030 and Hicks and another v CCE [2003] BVC 4114, both relied upon by the Appellant. However, only a headnote, rather than a decision, has been provided in the authorities bundle in each case and it has not been possible to find full decisions.[60]In respect of all three of these VAT and Duties Tribunal decisions, the point that the Appellant wished to make was that, while a counter-signature was not required for all assessments, where the circumstances were such that a counter-signature was required, then the assessment was not made until the relevant internal form had been counter-signed or approved by the counter-signing officer. Part of a decision that the Appellant relies upon is quoted in a more recent authority, and so it is convenient to consider the Appellant’s point below.[61]In HMRC’s 29 February 2024 response to the Appellant’s agent, HMRC stated: HMRC consider the counter signatory element to be irrelevant as the assessment was made first. Additionally, counter signing is considered to be an internal process.[62]In addition, at paragraph 19 of HMRC’s application to strike out this appeal, HMRC assert: The countersignature was not required to make the assessment and was only part of an internal management assurance process that did not form any part of making the final assessment.[63]No authority is provided by HMRC for the proposition that counter-signing is an internal, management assurance, process only.[64]Although not referred to by either party, in Go City Limited v HMRC [2024] UKFTT 00745 (TC) the FTT considered whether a counter-signature was required for an assessment. Although this part of the FTT’s decision was obiter as the FTT had already concluded that the assessments were invalid for other reasons, there is helpful analysis. The (lengthy) relevant section begins at paragraph 193 where the FTT set out the issue, and quoted from HMRC’s guidance: The Authorisation issue193. Mr Beale submitted that the Assessments were also invalid for a second reason. He said that where, as here, an assessment requires a counter-signature from another officer, the statutory time limits do not stop running until that signature has been procured. The guidance194. We first set out the HMRC guidance which applied at the time of the First and Second Assessments. VAEC6070 is headed "General assessment procedures: Definition of an assessment" and it includes the following text:
"Although there is no legal definition of what 'an assessment has been made' means, the courts have interpreted the law to mean that an assessment is made once you have finished calculating the amount of tax due and a final decision to assess that amount has been taken. This is normally considered to be when the amount has been • quantified • documented • checked • signed and dated. The documentary evidence of having made an assessment may be, for example the signed and dated schedules. The raising of a form VAT641, the computer input document for the notification of an assessment, is the first stage in the notification process and is a consequence of the decision to assess, rather than the actual making of the assessment itself… The VAT641 should normally be raised on the same day as the assessment is raised or shortly after." 195. VAEC6510 reads: "
The computer input form VAT641 (Adjustments Inputs Form) and continuation sheets are completed by the Assessing Officer to update the trader's record when an assessment is to be issued. Input of a VAT641 onto the VALID computer system automatically generates a VAT655 (Notice of Assessment(s) and/or Over-declaration) together with any other relevant documentation." 196. VAEC8650 is headed "How to assess and correct: Assessment procedures: Processing completed VAT641" and includes the following text:
"Once you have completed the VAT641 and it has been checked, you should capture the form to the trader's folder in EF and forward (with a secure note attached) to the authorising officer. The authorising officer will then look at case details in the penalty toolkit in SEES (until NPS becomes available) and EF, authorise the VAT641, update the secure note and forward to the VALID team for input… The information which is keyed from this document will be transferred to the VAT Mainframe and processed overnight to update the trader's files." 197. VAEC6520 is headed "
Countersigning forms VAT641, 642, 643 and 644", and begins:
"The decision on whether or not a countersignature is required in the following circumstances is not delegated. Countersignatures are required to provide internal management assurance where: • There is a net over-declaration within an accounting period, or • There is a reduction or withdrawal of an assessment, or • The assessment is complex. Ensuring it has been checked by an independent check officer, should reduce the risk of error or challenge. It should be noted that countersignatures are an internal management assurance tool and do not form part of the making of an assessment. A countersignature is not required to make an assessment."
Findings of fact about the procedures followed when making the Assessments 198. The normal procedure, as set out in the VAEC, is that the assessing officer completes a VAT641, which is authorised if required, and then entered into HMRC's computer system and generates a debt due to HMRC.[65]I assume that the basis of HMRC’s submission that a counter-signature is not required is this HMRC guidance.[66]The FTT then set out the factual background to the disputed assessments before summarising the authorities cited on behalf of the appellant, including Eyesave: The cases relied on by Mr Beale 206. In making this submission, Mr Beale relied on a number of VAT Tribunal decisions, and some subsequent case law. … 208. In Eyesave Ltd v C&E Commrs (2000) VAT Decision 16756 (" Eyesave "), Lady Mitting said at [11]:
"On 10 May, Mr Walsh prepared a form 641 (an officers assessment). He completed it by hand and incorporated his original figures produced to the Appellant on 10 March except for the revised figure for 5/96 and the resulting annual adjustment. Mr Walsh signed the form as "assessing officer" and dated it 10 May 1999. The form was then also signed and dated 10 May 1999 by a Mr Thomson as 'check officer'. Not all officers assessments need additionally to be countersigned by a senior officer but there are certain stipulated circumstances when they must be…The date of Mr Lambert's countersignature was a subject of dispute between the parties and as both parties agreed that the date of the counter-signature would be the date the assessment was raised it was clearly a matter of critical importance." 209. Having considered the evidence, Lady Mitting then said at [14] "
I find as a fact that Mr Lambert countersigned the form on the 10th and the assessment was therefore raised on that day". … The Tribunal's view 212. We carefully considered the VAT decisions, as well as Cheesman and Courts. However, we noted that: (1) In Classicmoor, the issue in dispute was "whether an assessment is 'made' when the assessment is notified to the taxpayer or whether the relevant time is an earlier date". It was not whether (a) the assessment was "made" when the officer issued it, or (b) when it was authorised. (2) In Eyesave, it was common ground that "the date of the counter-signature would be the date the assessment was raised", so there was no argument on that point. (3) In Babber, it was the Commissioners' position that the assessment was "made" when countersigned, rather than when notified. (4) In Cheesman, Collins J referred to those Tribunal decisions, but concluded his judgment at [31] by saying (our emphasis):
"Assessment of VAT is an important step, and it is unsatisfactory that the process is not transparent, and not defined by legislation or even by clear administrative practice. But I do not, on the unusual facts of this case, have to decide on the mechanism by which an assessment becomes complete , as it might be necessary to decide in a case where a time limit falls in the course of completion of the Form 641 process and the generation of the notice of assessment." (5) Although Mr Beale is correct that in Courts at [106] , Parker LJ had cited Cheesman, he did so to emphasise the point made in that case that the Commissioners should standardise their process. He went on to say at [107]: "
In my judgment, given that the making of an assessment is an internal matter for the Commissioners, in respect of which there is no prescribed statutory procedure, it is simply not possible to arrive at a formula which will determine in every case whether or not an assessment has been made. The Commissioners may, for example, decide to treat certain cases as special or exceptional cases, to which their normal internal processes should not apply." 213. It is clear from our summary above that it was not the ratio of any of these judgments that an assessment is "made" only when authorised. In Classicmoor the Tribunal said, "the power to assess is given to the Commissioners … and the actual procedure for assessing is left to them", and in Courts Parker LJ said that "the making of an assessment is an internal matter for the Commissioners, in respect of which there is no prescribed statutory procedure". 214. We agree with Mr Mantle that the position is the same today and that in March and June 2021 HMRC's internal procedures did not require a countersignature from a second officer for an assessment to be "made", because their guidance as set out at VAEC6520 said, at all relevant times: "It should be noted that countersignatures are an internal management assurance tool and do not form part of the making of an assessment. A countersignature is not required to make an assessment." 215. As a result, we reject the Appellant's case on the "authorisation" issue and instead agree with HMRC.[67]I do not consider that this is the end of the matter in the present case. I agree with the FTT in Go City Limited that no counter-signature was required in the circumstances of that case. However, as was said in Eyesave:
“Not all officers assessments need additionally to be countersigned by a senior officer but there are certain stipulated circumstances when they must be…”
[68]That brings me to the Court of Appeal decision in Courts plc v CCE [2004] EWCA CIV 1527. In setting out the background facts, Lord Justice Jonathan Parker said the following: 9. The Commissioners were naturally concerned to protect their position pending the final determination of their (eventually successful) appeal to the House of Lords in Primback, and on 16 December 1999 they purported to make an assessment designed to provide such protection. Before I describe how they did that, it is first necessary to explain the normal internal procedure adopted by the Commissioners for making an assessment in relation to a particular taxpayer and notifying the taxpayer of the assessment. 10. The normal procedure is (and was at the material time) as follows. The starting-point, in terms of the documentation, is the completion by an assessing officer of a standard form called a `VAT641', which is headed `Officer's Assessment'. Below the heading, spaces are provided for the insertion of the taxpayer's name, address and reference number, and the assessing officer's name. Beneath are a number of columns. To the left is a column in which the periods to which the assessment relates (up to a maximum of twelve) are identified. To the right of that column, under the heading `Assessment of tax (whole pounds only)' are two columns in which are inserted the amount of any VAT `Due to Customs & Excise' or, as the case may be, `Due from Customs & Excise', in respect of each of the identified periods. A space is provided at the foot of each of these two columns for the insertion of the total sum due to, or (as the case may be) from, the Commissioners. Further to the right are columns enabling the assessing officer to indicate (among other things) whether or not, in respect of any identified period, interest should be charged and/or a `misdeclaration penalty' imposed. At the foot of the VAT641 is a space for the signature of the `Assessing officer' (so described). The form also provides spaces for the signature of a `Check officer' and for a counter-signature. A counter-signature is required in cases where, for example, there has been an overdeclaration resulting in a sum being owed by the Commissioners to the taxpayer, or where the assessing officer has `inhibited' liability for interest and/or penalty that is to say where he has indicated in the appropriate column that interest is not to be charged, and/or that a penalty is not to be imposed.[69]In Courts, the Court of Appeal concluded that an earlier assessment that did not require a counter-signature was made when the assessing officer completed and signed off the relevant form (see paragraph 108 of that decision). In respect of a later assessment, it was noted: 25. … The VAT641 was signed by a `Check officer' on 27 November 2001 and counter-signed by a further officer on the same date. A counter-signature was necessary because (unlike the VAT641 dated 16 December 1999) this VAT641 `inhibited' the misdeclaration penalty.[70]The situation described in Courts is very similar to the factual position here, in that there was a penalty inhibition.[71]Bringing together the relevant legislation and the authorities cited above, I conclude: - for many assessments it is not necessary for a counter-signatory or authorising officer to consider the assessment, and in these cases an assessment will be made once the assessing officer has finished entering the required information into the assessing form (usually V461 but V462 here); - in some circumstances – as specified by HMRC’s own internal guidance – a counter-signature or authorisation is required, and in these cases the assessment is made only after it has been counter-signed or authorised by the second officer.[72]In each case where there is a dispute about whether an assessment is made within time, it will be necessary for the FTT to decide whether the assessment in question requires a counter-signature, and then to look at the dates on which the relevant officers acted.[73]As I have noted above, the onus is upon HMRC to demonstrate that this assessment was raised within time. The guidance relied upon by the Appellant, in particular the fourth bullet point of VAEC8820 (set out in paragraph 10 above) strongly suggests that a counter-signature is required when the assessing officer has made the decision to inhibit a penalty.[74]HMRC will have been aware from the many cases cited above that, usually, HMRC lead evidence on the assessing process. The relevant officers attend and give evidence about what they did. I have already noted (at paragraph 14) the absence of evidence and that I have not been told Officer Maddison’s reasons for passing form V642 to another officer. In the absence of any evidence about why this occurred, I found, on the balance of probabilities, that Officer Maddison followed VAEC8820 and passed the V642 to another officer to obtain authorisation for the penalty inhibit. This is in accordance with the practice described in Courts, although I am conscious that Courts describes events (and HMRC practices) of more than 20 years ago.[75]On the basis of the evidence before me I conclude: - although Officer Maddison completed the V642 on 27 June 2023, because of the decision to inhibit a penalty, a counter-signature was required; - Officer Maddison correctly passed the V642 to a more senior officer to counter-sign; - Officer Errington did not counter-sign the assessment until 18 July 2023.[76]I conclude that the assessment was made more than one year after HMRC’s receipt of the Appellant’s error correction notice. Therefore the assessment was made outside statutory time limits, and the Appellant’s appeal is allowed.

Conclusion

[77]For the reasons set out above: - HMRC’s application to strike out this appeal is REFUSED; and - the Appellant’s appeal against assessment is ALLOWED.

Right to apply for permission to appeal

[78]This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date: 12th JUNE 2025