HBS Enterprises Ltd v The Commissioners for HMRC [2026] UKFTT 764 (TC)

[2026] UKFTT 00764 (TC)Case No TC 09893
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 1 May 2026Date Judgment date: 22 May 2026
London Taylor House
Appeal reference: TC/2024/05912
VAT – output tax liability – supplies made through Amazon marketplace – mistakenly treated as a Non-Established Taxable Person – appeal allowed in part
Before
TRIBUNAL JUDGE ROSA PETTIFERTRIBUNAL JUDGE MATTHEW DONMALLSONIA GABLE
Between
HBS ENTERPRISES LTDAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Mehran Iqbal of Smart Leap 360 Ltd for AppellantMs Opemipo Abolude, litigator of HM Revenue and Customs’ Solicitor’s Office for RespondentsDECISION

Introduction

[1]This is an appeal against VAT assessments for quarters 05/23, 08/23, 11/23 and 02/24 upheld on review on 10 October 2024 (the Assessments). HMRC assessed a substantially greater amount of output VAT due on sales made by the Appellant than had been declared, on the basis that there were sales made through Amazon marketplace which the Appellant had wrongly treated as zero-rated. The Appellant argues that the Assessments are incorrect on various grounds. Its central challenge is that Amazon had undertaken to account for the output VAT on the relevant transactions, as it incorrectly considered the Appellant a Non-Established Taxable Person (NETP) as a result of an error made by HMRC. Law Statutory provisions[2]The Value Added Tax Act 1994 (VATA) provides for the obligation of a taxable person to account for and pay VAT in respect of supplies made by him by way of a number of provisions read together:(1) Section 3 provides that a person is a taxable person while he is, or is required to be, registered under VATA.(2) Section 4(1) provides that VAT shall be charged on any supply of goods or services made in the UK, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Section 4(2) defines a taxable supply as “a supply of goods or services made in the UK, other than an exempt supply”. To be a taxable supply therefore, it must be a supply made in the UK.(3) Section 7 determines when a supply of goods is made in the United Kingdom. Section 7(2) provides the general position that if the supply of any goods does not involve their removal from or to the United Kingdom they shall be treated as supplied in the United Kingdom if they are in the United Kingdom and otherwise shall be treated as supplied outside the United Kingdom, subject to further provisions. In general terms, therefore, if goods are supplied from the UK to a customer outside the UK (for example, France or Jersey), then that supply is not made in the UK, and so is not a taxable supply.(4) Section 24(2) defines “output tax” as VAT on supplies which a taxable person makes. Conversely, under section 24(1), “input tax” is the VAT on the supply to him of any goods or services, and VAT paid or payable on the importation of any goods, being goods or services used or to be used for the purpose of any business carried on or to be carried on by him.(5) Section 25(1) provides that a taxable person shall in respect of supplies made by him “account for and pay VAT” by reference to prescribed accounting periods, and s.25(2) entitles him to credit for so much of input tax as is allowable and to deduct that amount from any output tax that is due. As it is possible for a taxable person to have a higher amount of input tax credit than the amount of output tax due for an accounting period, it is possible that the net position is that the trader claims a net repayment of VAT from HMRC.[3]Section 73 VATA empowers HMRC to make an assessment “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”. Section 81(1)(p) provides that an appeal lies to the Tribunal in respect of an assessment under section 73(1) in respect of a period for which a return has been made by an appellant.[4]It is also relevant in this case to note specific provisions in VATA as amended which deal with the treatment of supplies of goods facilitated by online marketplaces:(1) Section 95A(1) defines “online marketplace” and “operator” of an online marketplace. It is not disputed that Amazon is an operator of an online marketplace for these purposes.(2) Section 5A is a deeming provision. In particular, where a person (“P”) makes a taxable supply of goods in the course or furtherance of a business to another person (“R”), that supply is facilitated by an online marketplace, and either (i) the supply of goods to R does not involve those goods being imported but P is established outside the United Kingdom or (ii) the imported consignment condition is met, Section 5A(3) sets out the imported consignment condition, which requires inter alia that the supply of goods to R involves those goods being imported and its intrinsic value is not more than £135. then s.5A(2) provides: “(a) P is to be treated as having supplied the goods to the operator of the online marketplace, and (b) the operator is to be treated as having supplied the goods to R in the course or furtherance of a business carried on by the operator.”(3) By way of s.30 and Schedule 8 group 21, a supply by a person established outside the United Kingdom that is deemed to be a supply to an operator of an online marketplace by virtue of section 5A is zero-rated, provided that the supply does not involve the goods being imported for the purposes of that section.[5]As a result of these provisions, if a trader supplies goods to a customer in the UK through the online marketplace operated by Amazon, and that trader is not established in the UK (i.e. is a NETP), then s.5A deems there to have been two supplies: first, a supply by the trader to Amazon which is zero-rated, and then a taxable supply by Amazon to the customer, which would give rise to an output tax liability that Amazon would itself have to account for. Case

Law

[6]The leading case on the proper approach of the Tribunal to an appeal brought against an assessment made by HMRC under section 73 is Pegasus Birds Ltd v Customs and Excise Comrs [2004] EWCA Civ 1015:(1) The tribunal should remember that its primary task is to find the correct amount of tax, so far as possible on the material properly available to it, the burden resting on the taxpayer, [38].(2) Therefore in all but very exceptional cases, the correct amount of tax should be the focus of the hearing, and the tribunal should not allow it to be diverted into an attack on HMRC’s exercise of judgment at the time of the assessment, [38].(3) The test of an assessment being made “to the best of their judgment” is that it must have been an “honest and genuine attempt”. There is no self-standing test of whether the assessment was “wholly unreasonable”,at [22] (“Even the term 'wholly unreasonable' (also used in Van Boeckel) may be misleading if it is treated as a separate test, rather than as simply an indication that there has been no ‘honest and genuine attempt’ to make a reasoned assessment”) and [77].(4) An allegation of dishonesty or other wrongdoing should be stated unequivocally by an appellant, at [38].(5) If an assessment was made to best judgment, the Tribunal may substitute its own assessment on appeal as to the tax due, at [88].(6) Even if the assessment was not made to best judgment, the Tribunal could still give a direction specifying the correct amount rather than set aside the assessment in its entirety, at [28-29] per Carnwath LJ, [90] per Chadwick LJ.

Evidence

[7]As regards documentary evidence, the Tribunal was provided with a hearing bundle of 3414 pages, the majority of which consisted of two sets of spreadsheets, listed as documents 51 and 52 in the index. As these spreadsheets were very difficult to understand in their pdf form in the bundle, the Tribunal requested ahead of the hearing that the underlying spreadsheets be provided in their original form, and twenty-four Microsoft Excel spreadsheets were duly provided. Twelve of these were Amazon VAT Transaction Reports (AVTRs)for each month from March 2023 to February 2024, listing all the transactions by row that the Appellant undertook through Amazon each month, which collectively formed document 51. The other twelve spreadsheets, document 52, were produced by Mr Iqbal from the AVTRs by filtering just those transactions that had been treated by Amazon as ones for which it (and not the Appellant) was responsible for accounting for VAT (the Amazon-responsibility Spreadsheets). We discuss the nature and significance of the AVTRs and the Amazon-responsibility Spreadsheets further below.[8]Additionally, during the hearing the Appellant sought permission to submit as evidence four single-page invoices from December 2023 generated from hyperlinks on the AVTRs. HMRC did not object to those documents being admitted and we gave permission accordingly (in any case they do not change our analysis).[9]Witness evidence was provided by Mr Charendeep Singh, director of the Appellant; Mr Mehran Iqbal, chartered accountant and tax adviser appointed as agent for the Appellant (who also appeared before us as the Appellant’s representative in the hearing); and Mr Moazzam Rasul, compliance officer at HMRC who was responsible for making the Assessments. All three witnesses were subject to cross-examination during the hearing. We find that all three men were honest witnesses who did their best to assist the Tribunal, although aspects of Mr Singh’s evidence about when he discovered that there was an issue with Amazon treating the Appellant as a NETP were hard to follow, and we prefer to rely on the documentary evidence for the purposes of our factual findings on such aspects as are relevant to our determination below.

Findings of fact

[10]In light of the documentary and witness evidence, we make the following findings of fact.

The nature of the Appellant’s business

[11]The Appellant was registered for VAT on 1 September 2019 and at all times thereafter the Appellant has been a taxable person, registered in the UK for VAT.[12]The business activity of the Appellant in the relevant period of March 2023 to February 2024 was internet retail sales made through eBay and Amazon online marketplaces.[13]On 31 March 2023, following a share purchase, Mr Singh became the director and owner of the Appellant, and the registered office address changed from an address in Southall, Middlesex to 50 Gledwood Drive, Hayes, UB4 0AH.[14]All the Appellant’s sales of goods were fulfilled from within the UK.

Amazon transaction reports

[15]A trader who uses the Amazon online marketplace can obtain from Amazon an AVTR. This can set out the transactions by month made by a trader through its online marketplace. Amazon provides definitions for each of the fields used in the AVTR on a webpage entitled “Amazon VAT transaction report field definitions” (the Field Definitions).[16]The monthly AVTRs from March 2023 to February 2024 inclusive detail all the transactions made by the Appellant through Amazon during each month by way of a spreadsheet. HMRC did not suggest that the AVTRs were created, altered or in any way fabricated by the Appellant. They include a great amount of detail, including under the column headings identified in the paragraph below. We find that they were generated by Amazon.[17]There are ninety-five columns in each AVTR, from column A to column CQ, each with a different field heading corresponding to a definition in the Field Definitions. These include:(1) A unique alphanumeric identifier for the trader’s account, columna. A.(2) The month in which the transaction took place, columnb. B.(3) A transaction event ID relating to the entire transaction in question, column G.(4) A description of the item being sold, column O.(5) The total activity price excluding VAT, column AD (i.e. taking into account the total price of the item, any shipping charge and any gift wrapping).(6) The VAT percent rate for the item, column AE, and for any shipping, column AI, with corresponding actual amounts of VAT, columns AF and AJ.(7) The total amount of VAT, column AQ, and the total activity value amount including VAT, column BA.(8) The departure country and post code, columns BK and BL.(9) The arrival country and post code, columns BN and BO.(10) The sale departure country and the arrival country, columns BP and BQ.(11) A URL link for the invoice for the seller’s transaction, column CK.(12) A column entitled “TAX_REPORTING_SCHEME”, column CP. The Field Definitions explain that “This column identifies the tax legislation pertaining to the transaction”, and defines the following entries:
“1. UK_VOEC-DOMESTIC: This stands for transactions having UK as the origin as well as destination country, that fall under the UK VAT on E-commerce legislation. It is relevant for transactions where Amazon collected and remitted tax to the authorities on behalf of any non-UK seller. For more information, go to UK VAT on eCommerce Legislation. … 4. DEEMED_RESELLER-IOSS: This stands for transactions having a country other than an EU member state as the origin country, and an EU member state as the destination country, that fall under the EU VAT On E-Commerce (“Deemed Reseller-Import One Stop Shop”) legislation. It is relevant for transactions where Amazon collected and remitted tax to the authorities on behalf of any seller for whom goods from outside EU were sold to an EU-based private individual. For more information, go to EU VAT On E-Commerce legislation … 9. REGULAR: Any transaction to which the above legislations or rules don't apply.” (13) The last column “TAX_COLLECTION_RESPONSIBILITY”, column CQ, is explained in the Field Definitions as follows: “…This column identifies the party responsible for collection and remittance of tax (VAT) to the authorities. Sale, refund: 1. SELLER: For transactions where the seller was responsible for collection and remittance of tax. 2. MARKETPLACE: For transactions where the marketplace (Amazon or other) was responsible for collection and remittance of tax. Non-Sale or Non-Refund transactions: This field will be blank”
Sale, refund: Non-Sale or Non-Refund transactions: This field will be blank”

Sale, refund:

[18]For each transaction undertaken by the Appellant through the Amazon marketplace, therefore, Amazon determined whether it considered the Appellant responsible for the collection and remittance of VAT, or Amazon, and that determination would be reflected by that final column, CQ, as either “SELLER”, if the Appellant was responsible, or “MARKETPLACE”, if Amazon itself was. Hereafter, we shall refer to a transaction in respect of which Amazon identified itself as responsible for accounting for VAT as a “Amazon-responsibility transaction”, and those transactions where the Appellant was identified as being responsible for collection as “SELLER transactions”.[19]Further, as column CP indicated, Amazon-responsibility transactions include two categories relevant to this appeal. First, the “UK_VOEC-DOMESTIC” transactions where Amazon considers that the seller is a non-UK seller, i.e. a NETP (UK_VOEC-DOMESTIC transactions). Second, “DEEMED_RESELLER-IOSS” transactions which go from the UK to outside the UK (non-UK transactions).[20]Mr Iqbal as agent for the Appellant considered each monthly AVTR, and by applying a filter to column CQ, identified those transactions for which Amazon had identified that it was responsible for the collection and remittance of tax, and thereby produced the Amazon-Responsibility Spreadsheets. This is evident from a comparison of the March 2023 AVTR, which, filtered on column CQ for “MARKETPLACE”, identifies 17 rows of Amazon-responsibility transactions, and the corresponding March 2023 Amazon-Responsibility Spreadsheet, which has the same 17 rows.[21]On each month’s Amazon-Responsibility Spreadsheet, Mr Iqbal calculated the sum of the total activity value for all the relevant transactions from column BA.

The Appellant’s Amazon transactions and Amazon’s treatment of them

[22]Taking each month in turn, from the corresponding AVTRs and Amazon-responsibility Spreadsheets, we find as follows:(1) In March 2023, of 1,457 rows of Amazon transactions recorded on the AVTR, 17 were Amazon-responsibility transactions. These were all identified as “DEEMED_RESELLER-IOSS” in column CP, i.e. were non-UK transactions involving sales from the UK to outside the UK (in every case in that month, Ireland). The sum of the value of these transactions for which Amazon stated it had the responsibility to account for VAT was £142.95 (column BA, row 17).(2) In April 2023, of 907 rows of Amazon transactions on the AVTR, there were 15 Amazon-responsibility transactions, at £114.26 total value, all non-UK transactions.(3) In May 2023, of 834 rows of Amazon transactions on the AVTR, there were 24 Amazon-responsibility transactions, at £301.52 total value, all non-UK transactions.(4) In June 2023, of 858 rows of Amazon transactions on the AVTR, there were 10 Amazon-responsibility transactions, at £113.06 total value, all non-UK transactions.(5) In July 2023, of 1,709 rows of Amazon transactions on the AVTR, there were 50 Amazon-responsibility transactions, at £423.97 total value, all non-UK transactions.(6) In August 2023, of 2,511 rows of Amazon transactions on the AVTR, there were 5 Amazon-responsibility transactions, at £40.85 total value, all non-UK transactions.(7) In September 2023, of 1,875 rows of Amazon transactions on the AVTR, there were 1,783 Amazon-responsibility transactions, at £16,827.28 total value. A small number were non-UK transactions. The rest were all designated as UK_VOEC-DOMESTIC transactions in column CP, i.e. were NETP transactions where Amazon was considering that it “collected and remitted tax to the authorities on behalf of any non-UK seller”.(8) In October 2023, of 1,425 rows of Amazon transactions on the AVTR there were 1,368 Amazon-responsibility transactions, at £12,138.36 total value. Some of these were non-UK transactions, the rest were designated as UK_VOEC-DOMESTIC transactions.(9) In November 2023, of 120 rows of Amazon transactions on the AVTR there were 118 Amazon-responsibility transactions, at £443.91 total value. Some of these were non-UK transactions, the rest were designated as UK_VOEC-DOMESTIC transactions.(10) In December 2023, of 29 rows of Amazon transactions on the AVTR, all 29 were Amazon-responsibility transactions, at £75.92 total value. Some of these were non-UK transactions, the rest were designated as UK_VOEC-DOMESTIC transactions.(11) In January 2024, of 141 rows of Amazon transactions on the AVTR, there were 132 Amazon-responsibility transactions, at £1,172.41 total value. Some of these were non-UK transactions, the rest were designated as UK_VOEC-DOMESTIC transactions.(12) In February 2024, of 390 rows of Amazon transactions on the AVTR, there were 363 Amazon-responsibility transactions, at £3,822.04 total value. One of these was a sale outside the UK to Jersey (designated a “JE-VOEC” in column CP), the rest were designated as “UK_VOEC-DOMESTIC” transactions.[23]On the basis of the above, we find that in September 2023 Amazon started to consider that the Appellant was a NETP for many of the Appellant’s transactions through the Amazon marketplace (because UK_VOEC-DOMESTIC is used “for transactions where Amazon collected and remitted tax to the authorities on behalf of any non-UK seller”). Given the online marketplace provisions of VATA discussed at paragraphs 4-5 above, we infer that Amazon considered that if the Appellant was a NETP, then the supplies that the Appellant was making to its customers were deemed under section 5A to be first a supply that the Appellant made to Amazon (which is zero-rated under Schedule 8 Group 21), and then a standard rated supply made by Amazon to the customer, for which Amazon would have to account for output VAT on its own account.[24]This is consistent with subsequent correspondence between the Appellant and Amazon. On 31 May 2024, Mr Singh wrote to Amazon, noting that Amazon was deducting VAT on the Appellant’s sales “despite the fact that we are based on the UK and are obliged to collect and report VAT on our sales to HMRC directly instead of the market place. Can you please clarify, why is Amazon deducting VAT on all our sales? Is that VAT paid to HMRC, if so how often is it paid?” Amazon’s substantive reply of 3 June 2024 included the following:
“Kindly note that we have completed our investigation and have found that this is a marketplace facilitator order and hence VAT is being collected and remitted to the tax authorities by Amazon. Your net proceeds will not include VAT for marketplace facilitator order. If you see ‘MarketplaceFacilitator’ on the Order Details page when confirming the order on Seller Central, this identifies that the order is under UK VOEC. With UK VAT on eCommerce (VOEC) legislation, from 1 January 2021, Amazon is responsible for collecting UK VAT on specific sales of goods delivered to customers in the UK, ordered through any Amazon storefront (MFN and FBA). For impacted sales, Amazon will calculate and collect UK VAT from the customer at checkout and remit this directly to the UK Tax Authorities. You will not receive the UK VAT amount in your disbursements and you will not be required to remit these amounts to the UK Tax Authorities. With UK VAT on E-Commerce (VOEC), you might be impacted by the following scenarios: 1. If you deliver goods to UK customers (who are not registered for UK VAT) from inventory stored inside the UK and your primary place of business is outside the UK, Amazon will be required to collect and remit UK VAT on these sales irrespectively of the value. 2. If you deliver goods to UK customers (who are not registered for UK VAT) from inventory stored outside the UK… 3. If you deliver goods to UK customers (who are registered for UK VAT – B2B customers) from inventory stored outside of the UK…”

With UK VAT on E-Commerce (VOEC), you might be impacted by the following scenarios:

[25]As the Appellant fulfilled its orders from inventory stored in the UK, we consider that the first scenario in this response was the one which Amazon considered applied to the Appellant’s situation, i.e. Amazon took responsibility for collecting and remitting the VAT because it (mistakenly) treated the Appellant as being a NETP.[26]All the transactions identified by Amazon as Amazon-responsibility transactions had zero in respect of VAT in column AE. We find that for the UK_VOEC-DOMESTIC transactions, that was because Amazon treated the Appellant’s supply as being made by a NETP and thereby deemed zero-rated, as per paragraph 23 above; for those transactions made to addresses outside the UK, it was because these were not taxable supplies for the purposes of UK VAT at all.[27]We also find that for Amazon-responsibility transactions, Amazon would reduce the sum of money paid to the Appellant in respect of such transactions by an amount corresponding to any VAT paid by the end customer, as Amazon was undertaking to pay that VAT, not the Appellant (Singh oral evidence, Amazon response of 3 June 2024 cited above (“You will not receive the UK VAT amount in your disbursements….”).[28]We decline, however, to make a finding of fact as to why Amazon treated the Appellant as a NETP. The Appellant invited us to infer that it was because of errors on HMRC’s part, namely in the VAT checker identifying its address at Ruby House and the HMRC NETP Indicator Team holding the Appellant as a NETP on its systems, and that this may have been due to Mr Singh’s Indian nationality. While that is a possibility, we did not have sufficient evidence before us to make a finding to this effect on the balance of probabilities. There is also the seeming anomaly that Amazon did not treat the Appellant as a NETP for all of its transactions in the period September 2023 to February 2024, only some of them, which again is unexplained on the evidence. However, for the reasons set out below, ultimately these are not questions which are relevant to the central issue before us, which is the correct amount of output tax due on the Appellant’s output supplies.[29]As to the UK_VOEC-DOMESTIC transactions, we find that Amazon did undertake to account to HMRC for the output tax on those transactions, but we have no evidence as to whether it did so, or in what amount, and make no finding of fact in those respects.

The Appellant’s VAT returns

[30]At some point prior to 29 April 2024 (the date when Mr Rasul sent his first letter to the Appellant), the Appellant through Mr Iqbal as its agent submitted its VAT returns for quarters ending 05/23, 08/23, 11/23 and 02/24. The Appellant’s sales and their treatment for the purposes of those VAT returns are set out in VAT (On Sales) Audit Reports. It is convenient to summarise these in the following table. This shows that in all four quarters, there were some Amazon sales that were treated as standard-rated, in particular in 05/23 and 08/23. The amounts treated as Amazon zero-rated sales correspond to the figures identified in the Amazon-Responsibility Spreadsheets. For example 05/23, the £558.73 was comprised of £142.95 from March 2023, £114.26 from April 2023, and £301.52 from May 2023. These figures correspond to those that Mr Iqbal had identified as the total value of the Amazon-responsibility transactions in the Amazon-Responsibility Spreadsheets, as noted at sub-paragraphs 22(1)-(3) above. There is one exception: for September 2023 where there is no exact correspondence: £16,864.69 was treated as zero-rated in the VAT Return, but £16,827.28 in the Amazon-Responsibility spreadsheet. Period Total sales treated as standard-rated (eBay and Amazon) eBay standard-rated sales Amazon standard-rated sales These figures are the residual values of total sales treated as standard-rated less the eBay standard-rated sales. Box 1 output VAT Amazon sales treated as zero-rated 05/23 £45,125.34 £27,717.35 This is calculated by taking eBay sales in March £7,601.28 + April £16,552.86 + May £3,563.21 = £27,717.35. £17,407.99 £9,025.08 £558.73 08/23 £90,670.91 £46,800.61 £43,870.30 £18,134.17 £577.88 11/23 £64,568.56 £64,425.66 £142.90 £12,913.69 £29,446.96 02/24 £10,340.97 £5,711.60 £4,629.37 £2,068.20 £5,070.37[31]We therefore find as a fact that the Appellant did not treat as zero-rated all the supplies it made through Amazon. Rather, it treated as zero-rated some of those supplies, being those which Amazon had treated as Amazon-responsibility transactions for which Amazon, not the Appellant, would be responsible for accounting for VAT. The value of the supplies which the Appellant treated as zero-rated in this way was accordingly:(1) £558.73 for 05/23;(2) £577.88 for 08/23;(3) £29,446.96 for 11/23; and(4) £5,070.37 for 02/24.[32]As regards the reason why Mr Iqbal completed the VAT Returns in this way, he stated that he did so to avoid double taxation, because he understood that Amazon would itself be accounting for VAT on Amazon-responsibility transactions (Iqbal WS para 3.4), i.e. it was not for the Appellant also to account for VAT on the same transactions. He stated that it was his belief at the time that Amazon had taken responsibility for Amazon-responsibility transactions because Amazon had misclassified the Appellant as a NETP.[33]We note that neither the Appellant nor Mr Iqbal seems to have appreciated at the time that some of the Amazon-responsibility transactions were in fact on the basis that some of the transactions were sales to places outside the UK. Mr Iqbal explained that these transactions were “AFN” transactions, or Amazon Fulfilment Network transactions, evident from column C of the AVTR, which meant that the shipments were fulfilled by Amazon on behalf of the Appellant. We infer that the fact of non-UK sales was not appreciated from the AVTRs and Amazon-Responsibility Spreadsheets either. This may have been because the Appellant’s attention was focused on the larger issue in the September 2023-November 2023 period when the large majority were deemed by Amazon to be UK_VOEC-DOMESTIC transactions due to a misclassification of the Appellant as NETP.[34]When he submitted the VAT Returns on behalf of the Appellant, Mr Iqbal knew that the correct position was that the Appellant was registered in the UK and that insofar as Amazon was treating the supplies as being made by a NETP giving rise to Amazon’s obligation to account for output tax on the same, it was proceeding on a mistaken premise. He submitted the VAT Returns consistent with Amazon’s mistaken approach in order to avoid the Appellant in substance paying the output VAT twice – once by having the value of the VAT element of the transaction paid by the customer taken from it by Amazon, and then by accounting to HMRC for the same output VAT value.

HMRC’s check, correspondence and subsequent Assessments

[35]The Appellant’s VAT returns for the periods in question were forwarded to Mr Rasul, compliance officer at HMRC, to check.[36]Mr Rasul wrote to the Appellant on 29 April 2024 asking for various documents and asking for an explanation of the repayment position (letter of that date).[37]Mr Iqbal replied on 10 May 2024, stating that they were in the process of gathering the information requested, and also raising the fact that the HMRC online VAT check website wrongly identified the Appellant’s registered business address as HM Revenue and Customs, Ruby House, 8 Ruby Place, Aberdeen AB10 1ZP (Ruby House), which he stated was typically designated for a NETP. He asked for the appropriate HMRC department to update the address to the correct one, 50 Gledwood Drive, Hayes, UB4 0AH. He attached to that email a pdf of the webpage, which was included in the hearing bundle. We accept this as evidence that the HMRC VAT check website mistakenly showed on 10 May 2024 that the Appellant was registered at the Ruby House address.[38]We also find that Mr Iqbal was correct to state that Ruby House was used as the address for a person designated as a NETP by HMRC, on the basis of written evidence of the Public Accounts Committee in the bundle (“The seller is registered with the Non-Established Taxable Persons unit, as they don’t have a UK fixed establishment, so their listed address will be HMRC’s Aberdeen office (Ruby House) which is the office responsible for these registrations.”).[39]We find as a fact that the HMRC NETP Indicator Team did mistakenly identify the Appellant as a NETP. We do so primarily on the basis of an email of 4 December 2025 from the HMRC NETP Indicator Team accepting that the Appellant was “previously held as a NETP on our systems. However this changed when we issued the decision letter on 4 September 2025.”), but we also accept Mr Iqbal’s witness evidence that he spoke to an HMRC officer on the telephone on 5 June 2024 who acknowledged that the incorrect NETP classification was a known issue within HMRC, which evidence was not challenged in cross-examination.[40]On 16 May 2024, the Appellant provided Mr Rasul with information over 19 emails, the first of which included “zero-rated sales are recorded in Excel” and VAT reports (i.e. the AVTRs) and bank accounts, and the other 18 emails attaching sales invoices and purchase invoices (none of these underlying sales invoices and purchase invoices were included in the bundle before us). Mr Iqbal explained that the repayment request was “due to purchase of inventory that was unable to be sold as a result of their Amazon seller account being suspended, leading to a loss in sales revenue. It is important to mention that their Ebay account was also suspended two weeks ago.” He explained that the zero-rated sales arose for the following reason:
“As a result of HMRC deeming the client as a Non-established Taxable Person (NETP), Amazon now deducts VAT from the sales prices at the point of sale and remits this directly to HMRC. This information can be verified by reviewing any Excel spreadsheet and navigating to column CQ, where Amazon specifies the Tax (VAT) Collection Responsibility. If "Marketplace" is indicated in that column, it means that Amazon has already remitted the VAT to HMRC. These sales are then classified as zero-rated on the VAT return to prevent the client from being charged VAT twice.”
[41]Although the Appellant had raised the issue of the HMRC VAT check website misidentifying the Appellant’s business address as Ruby House, Mr Rasul did not himself check within HMRC whether another part of HMRC had in fact treated the Appellant as a NETP or why it had done so. Mr Rasul was clear in his oral evidence that this was because he did not consider that was relevant to the matter he had to decide, namely the proper amount of tax that the Appellant should account for under VATA, given that the Appellant was at all times registered as a taxable person in the UK. In short, if there was a mistake on the part of some part of HMRC, that did not affect the Appellant’s VAT position in law. This is consistent with the position he asserted in correspondence dated 23 May 2024 (“I note the contents of your email, it is clear to me that your client is based in the UK albeit they have a registered address at NEPTU [we infer this is a reference to Ruby House]. The responsibility lies with your client to make sure that their details and registration address is correct.”)[42]Although the Appellant had asserted that on the transactions it had treated as zero-rated, Amazon had already remitted the VAT to HMRC, Mr Rasul at no point raised any enquiry internally or with Amazon as to whether Amazon had remitted VAT on those transactions. He explained in his oral evidence that if Amazon had accounted for VAT, that was for Amazon and the Appellant to resolve, or for Amazon to resolve with HMRC, but it was not a matter that affected his analysis of the Appellant’s correct VAT position in law.[43]Mr Rasul stated in evidence that his intention was to assess the output VAT on the Amazon sales that the Appellant had treated as zero-rated. Mr Rasul raised this on 30 May 2024 (“Can you please advise what your client’s zero-rated sales are for periods 05/2023, 08/2023, 11/2023 and 02/2024”). Mr Iqbal responded on 5 June 2024, providing the Amazon-responsibility Spreadsheets and explaining “The reports have been filtered to display the "Tax Responsibility" in Column CQ, indicating that VAT has been collected by Amazon and remitted to HMRC on behalf of the client, resulting in Zero Rating of those amounts in our VAT reports/workings. The total amount can be found in column BA.” Mr Rasul replied that he was still having difficulty trying to work out the zero-rated sales on 13 June 2024. On 26 June 2024, Mr Rasul asked for the gross sales made through Amazon, to which Mr Iqbal responded on the same day, saying that all Amazon sale transactions were documented on the VAT detailed reports (i.e. the AVTRs).[44]On 27 June 2024 Mr Rasul provided his own spreadsheet setting out “HBS Amazon Sales” calculating as follows:(1) Period 05/23: £21,728.94 over date range 27/02/23 to 03/06/23(2) Period 08/23: £54,927.36 for date range 03/06/23 to 04/09/23(3) Period 11/23: £32,433.40 for 04/09/23 to 05/02/2024, and(4) Period 02/24: £3,490.57 for 05/02/24 to 04/03/24.[45]It will be apparent that the date ranges here do not accord with the months for quarters ending 31 May 2023, 31 August 2023, 30 November 2023 and 28 February 2024. In respect of periods 11/23 and 02/24 the calculations are significantly inaccurate, the calculation for period 11/23 covering over five months from 4 September 2023 to 5 February 2024, and the period 02/24 conversely being just 28 days, 5 February 2024 to 4 March 2024. This is a point to which we return at paragraph 59 below.[46]There were several further exchanges, including emails on 10 and 11 July 2024 from Mr Iqbal stating that the total amounts that the Appellant treated as zero-rated were those as set out at paragraph 31 above.[47]On 25 July 2024, Mr Rasul wrote to the Appellant, ending: Without any evidence to the contrary VAT would be due on all Amazon sales and your client is responsible for accounting for this VAT to HMRC not Amazon. As it stands output tax due on Amazon sales would be as follows. Period 05/2023 - £21,728.94 – VAT Due - £3,621.49 Period 08/2023 - £54,927.36 – VAT Due - £9,154.56 Period 11/2023 - £32,433.40 – VAT Due - £5,405.56 Period 02/2024 - £3,490.57 – VAT Due - £581.76 If as you say Amazon has already accounting [sic] for this VAT to HMRC then Amazon can make a disclosure to HMRC for this output tax they have incorrectly accounted to HMRC. I believe I have previously commented on your client’ [sic] NEPTU status, as per our records your client is based in the UK and this would not apply to them.[48]On 30 July 2024, Mr Rasul emailed the Appellant with a decision letter and the four VAT assessments. These Assessments amended the VAT returns as made in the following ways:(1) For 05/23, an additional £3,621.49 was added to the box 1 output tax figure.(2) For 08/23, an additional £9,154.56 was added to the box 1 output tax figure.(3) For 11/23, an additional £5,405.56 was added to the box 1 output tax figure.(4) For 02/24, an additional £581.76 was added to the box 1 output tax figure.(5) For 08/23, an amount of £702 was removed from the box 4 input tax figure, relating to a claim to input tax on the purchase of a stove (that is not an aspect of the Assessments which the Appellant contests in this appeal).[49]As further discussed below, there is a clear error in Mr Rasul’s calculations of the output tax liability, because he failed to take into account that the existing box 1 figures in the Appellant’s VAT returns had already accounted for output VAT on all the Appellant’s Amazon sales other than the Amazon-responsibility transactions, and it was only that subset of sales which the Appellant had treated as zero-rated. The effect of the Assessment for 05/23, for example, was to treat £21,728.94 as sales which the Appellant had wrongly treated as zero-rated, leading to an additional box 1 output tax liability of £3,621.49, when in fact the Appellant had only treated £558.73 sales as zero-rated in that period.[50]However, we make clear that we find that Mr Rasul was at all times seeking to undertake an honest and genuine assessment of the Appellant’s VAT liability. The Appellant did not suggest otherwise.[51]The Appellant requested a review, and on 10 October 2024 the Assessments were upheld, further to which on 7 November 2024, the present appeal was made.

Submissions of the parties

[52]We set out below a summary of the submissions of the parties with the aim of doing justice to them without unnecessarily lengthening the judgment. We assure the parties that to the extent that an argument has not been fully set out it was nevertheless considered when reaching our conclusion.[53]The Appellant in substance made four arguments as to why the Assessments were incorrect:(1) The Assessments incorrectly added output VAT to transactions upon which the Appellant had already accounted for output VAT. In other words, although HMRC had intended just to correct the treatment of those supplies that the Appellant had treated as zero-rated, in fact Mr Rasul’s calculations double-counted the output tax upon the SELLER transactions on which the Appellant had already accounted for VAT.(2) The Assessments wrongly assess the Appellant for VAT on the UK_VOEC-DOMESTIC transactions, because Amazon had already accounted for VAT on those as a result of HMRC’s own error in identifying the Appellant as a NETP at Ruby House, and the assessments would result in unlawful double taxation. The Appellant did however accept that it was at all times a taxable person in the UK.(3) The Assessments incorrectly treated as standard rated taxable supplies the non-UK transactions, i.e. those sales which were made to customers outside the UK and therefore were not taxable supplies at all.(4) The Assessments were not made to best judgment, because Mr Rasul did not check with Amazon whether it had accounted for VAT on the transactions; he did not check whether some part of HMRC had treated the Appellant as NETP or why; and he had not analysed the underlying evidential material properly. However the Appellant was clear that it did not allege bad faith on the part of Mr Rasul.[54]HMRC’s submissions in response to these four challenges were broadly as follows:(1) HMRC accepted that the principle behind the Assessments was to assess output tax on the Amazon transactions that the Appellant had treated as zero-rated. HMRC did not accept that the Assessments had failed to do this, although Ms Obolude was unable, with Mr Rasul’s assistance, to explain to us precisely the way in which the Assessments were calculated.(2) The fact that Amazon may have accounted for VAT on the transactions it identified as UK_VOEC-DOMESTIC transactions does not change the legal position that those transactions were not made by a NETP and the Appellant must account for VAT on its output supplies. Likewise, it makes no difference if Amazon’s error was as a result of an error by some part of HMRC, although it was not accepted that HMRC was responsible for how Amazon had classified the relevant transactions.(3) HMRC accepted that no input tax would arise in respect of transactions made by the Appellant from the UK to customers outside the UK. However, HMRC noted that this was not an aspect of the case that the Appellant had raised at the time or at any point prior to the hearing, and submitted that had it known of the issue, it would have sought further documentation to check that these supplies were in fact made to customers outside the UK.(4) The Assessments were made to best judgment, and Mr Rasul did make reasonable investigations and correctly considered the material disclosed by those investigations.[55]HMRC accepted that even if the Tribunal rejected the Appellant’s best judgment challenge, the Tribunal must still consider whether the amounts of the Assessments were calculated correctly.

Discussion

[56]As our primary task is to find the correct amount of tax, we will address first whether the Assessments assess the correct amount of tax. As the single input tax amendment of £702 is not disputed by the Appellant, that task concerns the increased assessments of output tax liability for the four periods in question.

Issue 1: The double-counting of output VAT already accounted for by the Appellant

[57]While Mr Rasul stated that his intention was only to assess as additional output VAT that VAT which arose on the sales treated as zero-rated, in fact what he did was to calculate the total gross sales that the Appellant made, work out the output tax on those sums, and then add that to the existing box 1 figures. In so doing, he failed to account for the fact that the Appellant had already accounted for output tax on all of its Amazon sales other than those specifically identified as Amazon-responsibility transactions, as is clear from consideration of the AVTR, the Amazon-responsibility Spreadsheets and the VAT returns.[58]As set out at paragraph 31 above, we have found the only sales through Amazon that the Appellant treated as zero-rated were the Amazon-responsibility sales, in the sum of:(1) £558.73 for 05/23;(2) £577.88 for 08/23;(3) £29,446.96 for 11/23; and(4) £5,070.37 for 02/24.[59]Accordingly, even were one to assume that all those Amazon-responsibility sales were taxable standard-rated sales (which is not the case, as we discuss under issue 3), the additional output tax liability would be 1/6 of those sums, and not the sums assessed by HMRC:(1) £93.12 for 05/23 (rather than £3,621.49 as assessed)(2) £96.31 for 08/23 (rather than £9,154.56 as assessed)(3) £4,907.83 for 11/23 (rather than £5,405.56 as assessed)(4) £845.06 for 02/24 (this is greater than £581.76 as assessed, presumably because of the inaccuracies in the date ranges that Mr Rasul used in his calculations as noted at paragraph 45 above. In any case, because of issues 2 and 3 this figure needs amendment as directed at paragraph 70 below).

Issue 2: Whether Amazon’s treatment discharges the Appellant’s VAT liability

[60]The Appellant’s contention was that even though it was registered in the UK throughout, the fact that Amazon undertook to account for VAT for those Amazon-responsibility transactions identified as UK_VOEC-DOMESTIC on the mistaken premise that the Appellant was a NETP meant that the output VAT in question had already been paid, so it was wrong for HMRC to assess the Appellant again for the same VAT. The issue was compounded as it considered that Amazon’s treatment of it as a NETP was due to error on the part of HMRC.[61]We are unable to accept these submissions, essentially for the reasons submitted by HMRC on this ground. The Tribunal’s jurisdiction in this appeal is under s.83(1)(p) VATA and is limited to determining whether HMRC exercised best judgment and the correct amount of tax due. On the correct amount of tax, as the Appellant was a taxable person in the UK and section 5A did not apply to any of the Amazon-responsibility transactions, even if Amazon mistakenly considered otherwise. For the Amazon-responsibility transactions which were within the UK (as to which see issue 3 below), as taxable supplies of goods made by the Appellant, s.25 mandates that the Appellant “shall… in respect of supplies made by him, account for and pay VAT…”, by way of the VAT returns. The Appellant did not do so, and it follows that the VAT returns were incorrect to that extent, and that HMRC was right to make assessments adjusting the output VAT amounts, albeit not in the sums stated in the Assessments.[62]This conclusion is not affected by the possibility that Amazon may itself have accounted for VAT on those transactions (as it asserted that it would). As Amazon was treating the UK_VOEC-DOMESTIC transactions as having been undertaken by the Appellant as a NETP, Amazon would have been erroneously working under the assumption that s.5A VATA applied, such that the transactions in question gave rise to two deemed supplies, a zero-rated supply by the Appellant to Amazon, and then a standard rated supply by Amazon to the end customer. Therefore even assuming that Amazon did account for VAT on the transactions, it would have been accounting for it on the basis that under s.5A and s.25, they were supplies made by Amazon and as such Amazon was accounting for VAT on its own supplies. Consequently, any VAT purportedly accounted for by Amazon would have been in respect of its own VAT liability as Amazon understood it and not as some manner of third-party payment or discharge of the Appellant’s own VAT liability per se.[63]Our conclusion is also not impacted by there having been mistakes on HMRC’s part in identifying Ruby House as the Appellant’s business address on the HMRC VAT check website and the NETP Indicator Team considering it a NETP. It may be that such errors resulted in Amazon treating the Appellant as a NETP for many of the transactions from September 2023 to February 2024, although as above we do not consider that there is sufficient evidence to make such a finding. But even assuming that were the position, it would make no difference to the Appellant’s output VAT position in law.[64]Finally, for the same reasons the fact that the Appellant may already have had its disbursements from Amazon reduced by an amount reflecting the amount of VAT Amazon itself accounted for on UK_VOEC-DOMESTIC transactions does not alter the strict VAT position that the Appellant must account for and pay the output VAT.[65]We appreciate that the Appellant may think this conclusion is unfair. However, our jurisdiction in this appeal is to determine the correct amount of tax payable by the Appellant. The proper legal position in our judgment is that as the relevant supplies were undertaken by the Appellant as a taxable person registered in the UK, the correct analysis is that the Appellant has to account for output tax on those supplies, irrespective of the mistaken treatment of the same by Amazon.

Issue 3: The non-UK supplies

[66]Under s.7(2) VATA, a supply of goods that involves the removal of those goods from the UK will generally be treated as supplied outside the UK, and so not a taxable supply under s.4. HMRC accepted that if supplies were made to customers outside the UK, then such supplies would not be taxable and would not give rise to output tax.[67]It follows therefore that that such transactions as are identified as non-UK transactions by Amazon (generally as “DEEMED_RESELLER-IOSS” in column CP, save for those to Jersey, “JE-VOEC”) are not taxable and did not give rise to any output VAT.[68]Although the Appellant had not raised the non-UK identity of some of the Amazon-responsibility transactions prior to the hearing, that does not preclude us from considering the point, given our primary responsibility to determine the correct amount of tax on the evidence before us, and the fact that HMRC have long had the requisite information in the AVTRs and Amazon-responsibility Spreadsheets. As to HMRC’s submission that had they known, more evidence would have been sought to identify that these were indeed non-UK transactions, HMRC did not contend that the AVTRs were not genuine; the AVTRs were generated by Amazon, and the details of the shipping destinations and transactions as a whole satisfy us that those non-UK transactions were indeed such.[69]In the periods 05/23 and 08/23, all of the Amazon-responsibility transactions are non-UK transactions. It therefore follows that we are satisfied that the output tax box 1 figures in the Appellant’s VAT returns are correct. The only Amazon transactions that were excluded from those figures were the Amazon-responsibility transactions, and all of those were non-UK transactions which did not give rise to output tax.[70]For periods 11/23 and 02/24 only some of the Amazon-responsibility transactions were non-UK transactions which did not give rise to output tax. We therefore direct that the parties seek to agree the additional amount of output tax to be added to the box 1 figures on the VAT returns by excluding the non-UK transactions from the Amazon-responsibility transactions in those periods, in order to determine the additional output tax arising in respect of the UK_VOEC-DOMESTIC transactions alone. This might be done as follows:(1) Aggregate the value in column BA of the non-UK transactions by month in each of the Amazon-responsibility Spreadsheets for September 2023 to February 2024 inclusive.(2) Aggregate September/October/November and December/January/February values from step 1 above for the two periods 11/23 and 02/24 respectively.(3) Deduct that aggregate amount determined in step 2 from the total value of the Amazon-responsibility sales for those two periods as identified at paragraph 58.(4) Divide the residual amount by six so as to identify the 20% output tax on the Amazon-responsibility transactions that were mistakenly treated as zero-rated as being UK_VOEC-DOMESTIC transactions.

Issue 4: Best judgment

[71]We have explained at paragraph 6 above that the test for whether HMRC has made an assessment to the best of their judgment is whether it was an honest and genuine attempt. We have found that Mr Rasul was honest and genuine in making the Assessments, and the Appellant does not contend otherwise. There is no basis therefore for setting aside the Assessments for not having been made to best judgment, even though these Assessments did not in fact find the correct amount of tax. We find likewise as regards the Appellant’s complaints that Mr Rasul did not check the position with Amazon and did not investigate the mistake on HMRC’s part in identifying the Appellant as a NETP. These do not mean that the Assessments were not made to best judgment, and we accept Mr Rasul’s evidence that he sought to identify the correct amount of the Appellant’s VAT liabilities in law.

Conclusions

[72]For these reasons, we allow the Appellant’s appeal in part:(1) The 05/23 Assessment is set aside in its entirety. The output tax box 1 figure is to remain as stated by the Appellant in its VAT return.(2) The 08/23 Assessment is varied as follows: the output tax box 1 figure is to remain as stated by the Appellant in its VAT return, but the deduction to the input tax box 4 figure of £702 is upheld.(3) The 11/23 Assessment is varied, and the parties are to seek to agree the output tax box 1 figure in accordance with paragraph 70 of this decision.(4) The 02/24 Assessment is varied, and the parties are to seek to agree the output tax box 1 figure in accordance with paragraph 70 of this decision.[73]The parties have liberty to apply to the Tribunal for determination of quantum of the varied assessments for 11/23 and 02/24 should the parties not agree.

Right to apply for permission to appeal

[74]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: 22 May 2026