Vani Enterprises Limited v The Commissioners for HMRC [2026] UKFTT 885 (TC)
Introduction
[1]This decision concerns two appeals brought by Vani Enterprises Limited (Vani) as follows:(1) an appeal against an assessment raised by HMRC dated 8 August 2019 under s 73 Value Added Tax Act 1994 (VATA 1994) for Value Added Tax (VAT) in respect of VAT periods 02/16 to 11/17 inclusive (the VAT Assessment); and(2) an appeal against the decision of HMRC to assess Vani under para 41(1), sch 18 Finance Act 1998 (FA 1998) for corporation tax (CT) in respect of accounting periods ending 23/11/16; 30/11/16; and 30/11/17 (the CT Assessments).[2]The VAT Assessment and the CT Assessments have been reduced since their issue following correspondence with Vani, and the adjusted amounts under appeal are £22,400 and £84,701.66 respectively.[3]By directions dated 16 May 2024, the two appeals were consolidated under a single appeal number to be heard together.[4]Related VAT and CT penalties are not under appeal.[5]The form of the hearing was V (video) and all parties attended remotely using Microsoft Teams. We were referred to a hearing bundle of 698 pages.[6]Prior notice of the hearing had been published on the gov.uk website, with information about how representatives of the media or members of the public could apply to join the hearing remotely in order to observe the proceedings. As such, the hearing was held in public.The Hearing
[7]We heard witness evidence from Mr Uthayakumar Ganeshamoorthy, accountant, of APT Accountants LLP (APT). As APT had been appointed by Vani in November 2018 only, Mr Ganeshamoorthy said that APT had had no knowledge of or involvement in the VAT investigation until April 2019 when the client informed APT about the VAT investigation and penalties.[8]We also heard witness evidence from:(1) Officer Paul Jellis, Compliance Higher Officer, who discovered the inaccuracy in Vani’s CT returns for the periods under appeal and raised the CT Assessments; and(2) Officer Karen Cousins, VAT Compliance Officer, who took over matters relating to Vani’s VAT Assessment on 17 October 2019.[9]We received a skeleton argument from HMRC. During the hearing, we were told that a skeleton argument had been provided on behalf of Vani. We had received no such document. Later in the hearing, it was confirmed that the skeleton argument had in fact been the witness statement of Mr Ganeshamoorthy, which was included in the hearing bundle.[10]At times, Mr Muthulingam’s cross examination of HMRC witnesses took the form of submissions. We sought to make note of submissions whilst ensuring witnesses were cross examined fairly and appropriately.[11]We gave our decision orally at the hearing and were minded to follow this with a summary decision. However, as it was made clear to us that Vani wished to receive a fully reasoned decision to enable Vani to seek permission to appeal, we have prepared this full decision.Background and Facts
[12]Vani is a company registered for VAT and operating two convenience stores: Uncle Ben’s, the larger store; and Colvills Newsagents, the smaller store.[13]In September 2018, HMRC opened a VAT enquiry into Vani, made a VAT compliance visit and subsequently made a request for further information and documents.[14]On 3 April 2019, having received no response, HMRC wrote to Vani and APT advising of their view of the matter and inviting comment.[15]On 12 April 2019, APT requested a copy of an earlier information request and HMRC responded.[16]On 2 May 2019, APT wrote to HMRC in response to earlier correspondence.[17]On 20 May 2019, HMRC provided information to Vani related to VAT penalties and on 28 June 2019 APT sought extended time to provide information required.[18]On 4 July 2019, HMRC issued a pre-assessment letter which was followed on 18 August 2019 by the VAT Assessment.[19]HMRC issued inaccuracy penalties on 10 December 2019.[20]On 7 October 2020, APT contacted HMRC seeking to bring a late appeal and, on 18 November 2020, HMRC responded requesting submission of outstanding VAT returns for periods 11/18 to 02/20. This letter noted that Vani had been persistently non-compliant in submitting VAT returns and payments resulting in Vani being in the default surcharge regime.[21]Prompted by the VAT check, HMRC requested information relating to Vani’s CT position for the accounting periods under appeal on 21 June 2021. HMRC also requested information relating to expenses and Vani’s directors’ loan accounts.[22]On 31 August 2021, APT sought all correspondence relating to the enquiry, saying they wished to resolve any issues. This correspondence was supplied by HMRC on 17 September 2021.[23]On 18 November 2021, HMRC wrote to Vani informing them that CT assessments were being issued based on undeclared sales in the sum of £219,676.21 from one of Vani’s stores between 1 December 2015 and 30 November 2017.[24]On 29 November 2021, APT notified Officer Jellis by email that Vani was disputing HMRC’s calculations and were working out the correct VAT amount, requesting a hold on enforcement action until the calculations were received and could be considered. This email was subsequently treated as an appeal against the CT Assessments.[25]On 9 March 2022, HMRC issued their view of the matter in respect of the CT Assessments, noting that no changes would be made because no further supporting evidence had been received, and on 23 June 2022, HMRC wrote to APT saying that the CT position had not changed.[26]Correspondence between May and November 2022 was entered into relating to VAT periods 02/16; 11/16; and 05/17 and reductions to the VAT Assessment were made in respect of periods 11/16 and 05/17 upon receipt by Officer Cousins of additional evidence supporting such reductions.[27]On 6 December 2022, HMRC emailed APT to advise that the CT Assessments would be amended in accordance with the adjustment to the VAT Assessment noted at [26] above and the adjusted CT Assessments were issued on 16 December 2022.[28]On 28 February 2023, APT asked for additional time to supply information in respect of the CT Assessments and HMRC responded that 18 months had been allowed to supply relevant information.[29]Correspondence between March and April 2023 was entered into concerning VAT periods 11/16; 02/17; 05/17; and 08/17 and APT confirmed that no adjustments were required for period 05/17 but supplied revised calculations for the 11/16 and 02/17 periods.[30]On 25 April 2023, HMRC offered APT an independent review of the decision to issue the CT Assessments.[31]On 10 May 2023, HMRC emailed APT to inform them that the VAT figures had already been dealt with and finalised and were now out of time to be amended.[32]A review conclusion letter upholding the CT decision in the amount under appeal was issued by HMRC on 25 July 2023.[33]Vani appealed the CT Assessments to this Tribunal on 23 August 2023.[34]In October 2023, Vani applied for ADR.[35]Vani appealed the VAT Assessment to this Tribunal on 12 January 2024. Although the appeal against the VAT Assessment was out of time, no objection was made.[36]By 24 February 2024, the ADR process, which considered both the VAT and CT decisions had concluded unsuccessfully, though HMRC were prepared to consider further evidence to support Vani’s claim for input tax relating to VAT periods 11/16 and 02/17.[37]Detailed reports relating to those two VAT periods were provided to HMRC by Vani on 28 February 2024, though no reconciliations were supplied in support of the reports at that time and HMRC informed Vani that further evidence was needed.[38]In June 2024, HMRC corresponded with Vani concerning sales figures and further information was supplied by Vani, some of which had already been supplied and taken into consideration.[39]On 15 August 2024, HMRC wrote to Vani concerning missing information. When there was no further engagement from Vani, HMRC issued a CT penalty assessment on 23 September 2024.[40]By email dated 8 November 2024, APT acknowledged that invoices for a period more than 5 years earlier could not be retrieved from Booker and could not be supplied. They said that VAT information provided had been taken from the workings of Vani’s previous accountant.[41]On 10 March 2025, APT submitted a substantial number of invoices in relation to Bookers Cash and Carry.[42]On 14 March 2025, APT emailed bank statements for periods 16 September 2016 to 28 February 2017.The Law and Issues
[43]We set out the law and issues relating to the VAT Assessment and the CT Assessments separately below. The VAT Appeal[44]Under s 73(1) VATA 1994, HMRC may assess the amount of VAT due from a taxpayer to the best of their judgment and notify it to that taxpayer where VAT returns have not been made, documents necessary to verify such VAT returns have not been kept, or where it appears to HMRC that such VAT returns are incomplete or incorrect.[45]The phrase “to the best of their judgement” was considered by the High Court in Van Boeckel v C & E QB Dec 1980 [1981] STC 290 which set out the following principles: that HMRC should not be required to do the work of the taxpayer; HMRC must perform their function honestly and above board; HMRC should fairly consider all the material before them and on that material come to a decision which is reasonable and not arbitrary; and there must be some material before HMRC on which the judgement can be based.[46]The basic principles have been refined in subsequent cases, and three further principles were put forward in CA McCourtie LON/92/191: that the facts should be objectively gathered and intelligently interpreted; the calculations should be arithmetically sound; and any sampling technique should be representative.[47]The time limit for issuing an assessment under s 73 VATA 1994 is up to four years under s 77(1) VATA 1994. Under s 73(6) VATA 1994, an assessment shall not be made after the later of two years after the end of the relevant prescribed accounting period or one year after evidence of the facts, sufficient in the opinion of HMRC to justify making the assessment, comes to their knowledge.[48]The VAT enquiry was opened in September 2018 and on 18 August 2019, HMRC issued the VAT Assessment based on underdeclared sales that resulted in an underdeclaration of output tax. There is no dispute that the VAT Assessment was made and issued within the required timeframes.[49]If HMRC can show that the VAT Assessment was raised correctly and to the best of their judgement, the burden of proof shifts to Vani to demonstrate, on the balance of probabilities, that the VAT Assessment was incorrect. The CT Appeal[50]Under para 41, sch 18 FA 1998, if an officer of HMRC discovers as regards an accounting period that an amount which ought to have been assessed to tax has not been assessed, the officer may make a discovery assessment in the amount or further amount which ought in their opinion to be charged to make good the loss of tax. The discovery may be made where there is careless or deliberate conduct.[51]The time limit for issuing a discovery assessment under para 41(1), sch 18 FA 1998 is up to six years under para 46(2), sch 18 FA 1998 where the actions were careless.[52]There was no dispute that the CT Assessments were made within the required timeframes. No challenge was made to HMRC’s assertion that Vani had been (at least) careless in not keeping full and accurate accounting records leading to the inaccuracy in CT returns for the periods under appeal.[53]The CT Assessments were calculated based on underdeclared sales reflected by the VAT Assessment and a corresponding charge under s 455 Corporation Tax Act 2010, with additional sales treated as credits to sales and corresponding debits to Vani’s Directors Loan Accounts (DLA).[54]If HMRC demonstrate that the CT Assessments were raised correctly, Vani must show, on the balance of probabilities, that they were overcharged, or the CT Assessments will stand.Grounds of Appeal
[55]Vani stated their grounds of appeal against the VAT Assessment and desired outcome in their notice of appeal. The grounds were that some input VAT invoices had not been included and the desired outcome was that the purchase invoices and input VAT should be included in the assessment.[56]Vani stated their grounds of appeal against the CT Assessments and desired outcome in their notice of appeal. The grounds were that HMRC and previous accountants had not taken all purchases and expenses into account and that a recalculation had been made with previously missed purchases and expenses and the desired outcome was that they wished the calculation to be based on the revised VAT figure.Submissions and Evidence
[57]Officer Cousins’ evidence first covered the making of HMRC’s best judgment assessment by the previous VAT officer based on estimating missing sales figures for the Uncle Ben’s store and comparing them to VAT returns as Vani had failed to keep full and accurate records. She confirmed she had adopted that officer’s decision.[58]Next, Officer Cousins said that, in May 2022, she had agreed to consider further information for periods 02/16; 11/16 and 05/17 where that could be provided and substantiated. This led to an adjustment to underdeclared sales and a reduction in output tax which were notified to Vani.[59]In April 2023, Officer Cousins was asked to check reports for periods 11/16 and 02/17 in connection with the CT investigation. The reports appeared to include revised VAT declaration figures for output tax, input tax and net VAT. Officer Cousins says that no supporting documentation was supplied to confirm the figures.[60]Following ADR, Vani had the opportunity to explain their calculations and provide additional evidence for periods 11/16 and 02/17 even though it was outside of the appeal period. Officer Cousins says that she worked with Vani regarding the remaining periods and VAT detailed reports were then provided by APT listing all transactions. This prompted a request from Officer Cousins for additional information relating to 12 transactions under consideration.[61]Officer Cousins gave evidence that she received an undated Excel spreadsheet listing Booker transactions and some invoices. Following further correspondence, Officer Cousins was provided with 35 pdf attachments of invoices and APT confirmed that some of the invoices provided were duplications. Officer Cousins was unable to reconcile the VAT detailed report with the invoices provided.[62]In February 2025, Officer Cousins was provided with five email attachments which together contained 1,495 pages of Bookers purchase invoices which she had been unable to reconcile. Her evidence is that they were not referenced to the Excel spreadsheets or VAT account provided by APT. Further, the Excel spreadsheets were undated and unreferenced to purchase invoices or payments. As at the date of the hearing, despite multiple requests, no reconciliation had been provided of invoices and payments regarding the high values of input tax on the VAT detailed reports.[63]In terms of additional expenses, Officer Cousins said that she was not provided with alternative evidence or documentation to substantiate APT’s figures. She also pointed to bank statements being in the name of one of Vani’s directors and addressed to Uncle Ben’s rather than being in the name of Vani itself.[64]Officer Jellis gave evidence that he had opened an enquiry into Vani’s CT returns following the VAT compliance check. He had requested information relating to Vani’s CT position for the accounting periods under appeal on 21 June 2021 and also requested information relating to expenses and Vani’s DLA.[65]Officer Jellis noted that no accompanying supporting reconciliations were provided with VAT reports for periods 11/16 an 02/17 to justify allowing additional expenses and adjusting the CT calculation. He said that that position remained unchanged as at the date of the hearing and gave evidence that he had expected a reconciliation to be provided between invoices provided and the Excel spreadsheet and VAT reports.[66]Officer Jellis told the Tribunal that he had informed APT that, whilst HMRC had received additional invoices and bank statements, they had not been provided with a list of additional expenses with referenced purchase invoices or linked payments to verify the position. No further information was provided.[67]We were shown that Officer Jellis had requested Vani’s DLA but nothing had been provided. As such, he was unable to verify whether there were any additional expenses to offset against additional sales.[68]At the hearing, Mr Muthilingam explained that there had been delays in co-ordinating a response to HMRC’s investigations for several reasons. First, APT had been appointed after the investigations commenced. Second, a bereavement had affected Vani’s directors. Finally, Covid proved disruptive.[69]He said that information had been provided to Officer Cousins to support adjustments to the VAT Assessments. He put to Officer Cousins that everything had been provided in support of Vani’s position. Officer Cousins agreed that much information had been provided but said that she had tried to work through the volume of information and been unable to reconcile it.[70]In his evidence, Mr Ganeshamoorthy said that Officer Cousins should have asked for a reconciliation and they could have worked together but that hadn’t happened. He said that the matter should have been resolved at ADR. In response to a question from Ms Nkonde as to whether he agreed that it was for Vani to prove that the assessments were wrong, Mr Ganeshamoorthy said that APT were working on it. Ms Nkonde asked whether a reconciliation could be done today and he said it could and that he would need 30 minutes. When asked whether APT hadn’t had enough time, particularly given the hearing had been postponed from October 2025, he responded the information only came to him in February 2025 because it had been so old. He had sent it all together and had corresponded subsequently with Officer Cousins.[71]With respect to the bank accounts, Mr Ganeshamoorthy told the Tribunal that what had been provided was not a proper statement. The paper statement had been lost so the bank had provided a temporary statement by post. He confirmed to the Tribunal that it was a limited company bank account despite it showing only the name of Uncle Ben’s and one of the directors.[72]At the hearing, Mr Muthulingam put to Officer Jellis that the CT Assessments were incorrect as they had been based on turnover rather than exempt sales which would not lead to a s455 CTA 2010 charge. Officer Jellis said that that was the first time that had been pointed out and had thought the figures were based on Officer Cousins’ information. Mr Muthulingam agreed that this point had not been raised previously and not discussed. On re-examination, Officer Jellis confirmed that he had not received any evidence in relation to this point and that he stood by the CT Assessments in the amounts under appeal.[73]Mr Muthulingam’s submissions were that additional input tax should be taken into account and that it had been demonstrated why this should happen. He also said that Vani wanted purchases and expenses taken into account.[74]In addition, Mr Muthulingam submitted that there had been a problem with CT in assessing exempt sales. He said that it was incorrect the CT Assessments had been based on turnover rather than exempt sales.[75]Mr Muthulingam also said that around £100,000 had been paid already in respect of the CT Assessments following a debt management process so that should cover the DLA and there should consequently be no s455 CTA 2010 charge forming part the CT Assessments. Mr Ganeshamoorthy’s made the same assertion when giving evidence, though no supporting documentary evidence was shown to the Tribunal.[76]Ms Nkonde submitted that the VAT Assessment had been made to HMRC’s best judgement. Further to that, HMRC officers did engage with Vani and did reduce the amount of the VAT Assessment. They engaged with Vani and APT regarding further input tax recovery for periods 11/16 and 02/17. She said that Officer Cousins’ evidence was that she had not been supplied with the evidence she needed to make any further adjustments and the information available was not coherent. She submitted that little weight should be placed on the invoices and the Excel spreadsheet because the figures were not reconciled and that HMRC were justified in not making further amendments based on the information supplied.[77]Turning to the CT Assessments, Ms Nkonde submitted that the CT Assessments had been raised correctly and that Vani’s appeal depended entirely on the appeal relating to the VAT Assessment.[78]Regarding the DLA, Ms Nkonde submitted that Officer Jellis was not aware of cash transactions relating to debt management and further that this would not affect the matter under appeal and is simply vague and evasive speculation on behalf of Vani.[79]Ms Nkonde said that the DLA position of Vani had been considered from an accounts perspective in the absence of the DLA being provided and that the S455 CTA 2010 charge had been explained.[80]Ms Nkonde also noted that the hearing had been adjourned in October 2025 and that no further evidence since that date had been supplied to support Vani’s appeals. Discussion and DecisionThe VAT Appeal
[81]Having considered with care the evidence before us, we find that HMRC’s decision to issue the VAT Assessment for the periods 02/16 to 11/17 inclusive was correct. The compliance check uncovered inaccuracies and HMRC was entitled to make best judgement calculations based on information available to them. The VAT Assessment was made to the best of HMRC’s judgement, using an appropriate methodology and the information available at the time, estimating missing till receipts and comparing estimated sales to declared sales for each period.[82]We find that Vani has not met the burden of proving, on the balance of probabilities, that the VAT Assessment was incorrect. We appreciate that APT were instructed by Vani after the investigation into Vani’s VAT affairs were begun and that this time delay, their lack of involvement with Vani during the periods under appeal, bereavement and the intervening Covid-19 pandemic created difficulties in their seeking evidence and responding promptly to HMRC. Vani’s VAT records at the time of APT’s appointment had been incomplete and APT had since made efforts to find and submit evidence to support Vani’s appeal and were hampered by the significant time delay.[83]HMRC did work with APT and Vani to reduce the original VAT Assessment and continued beyond the conclusion of the ADR process to consider further evidence to enable the VAT Assessments to be reduced further. However, we accept that they were unable to do so based on the information provided for the 11/16 and 02/17 periods. The information provided to HMRC by APT was unwieldy and disorganised and included duplications. The bank statements provided were not in the name of Vani, but were addressed to Uncle Ben’s and in the name of one of Vani’s directors. Although Mr Ganeshamoorthy told us that it would take minutes to reconcile the invoices supplied with VAT reports, such reconciliation had been neither made nor provided ahead of the hearing date despite multiple prompts from HMRC and as such was unavailable for consideration by the Tribunal.[84]It was repeatedly stated on behalf of Vani that HMRC had not responded to information supplied by Vani, or that Vani had not been aware that further information was needed. We find that, to the contrary, Vani had been asked on multiple occasions over a number of years to supply information and that it had been provided slowly and in a piecemeal fashion and had been considered by HMRC officers. Where HMRC officers had sought further information, this had been communicated often and clearly.[85]The Tribunal is therefore unable to find, based on the evidence available, that the VAT Assessment was incorrect.[86]It follows that the appeal against the VAT Assessment is DISMISSED.The CT Appeal
[87]There was no challenge to the validity of the CT Assessments and we are satisfied that they were raised correctly.[88]We find that the evidence before the Tribunal is simply insufficient to demonstrate, on the balance of probabilities, that the CT Assessments are incorrect.[89]As set out at [82] to [86] above, Vani has not satisfied this Tribunal that the VAT Assessment was incorrect. There is therefore no corresponding adjustment to be made to the CT Assessments.[90]Mr Muthulingam acknowledged that his additional submissions challenging the accuracy of the CT Assessments had not been raised ahead of the hearing because APT’s focus had been on the VAT Assessment. No supporting evidence was provided to the Tribunal to aid consideration of these additional submissions.[91]We note that Tribunal directions dated 1 May 2025 required Vani to serve documents and witness statements that Vani wished to rely up on at the hearing and notified Vani that failure to do so may preclude reliance on any such documents at the hearing. We note also that a previous hearing scheduled for October 2025 had been adjourned.[92]As such, we are satisfied that Vani had sufficient opportunity and notice to provide evidence to show why the VAT Assessment and, consequently and additionally, the CT Assessments were incorrect, and they did not do so.[93]It follows that the appeal against the CT Assessments is DISMISSED.Right to apply for permission to appeal
[94]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: 10 June 2026