“(1) Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are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 judgement and notify it to him. 3 (2) In any case where, for any prescribed accounting period, there has been paid or credited to any person – (a) as being a repayment or refund of VAT, or (b) as being due to him as a VAT credit, an amount which ought not to have been so paid or credited, or which would not have been so paid or credited had the facts been known or been as they later turn out to be, the Commissioners may assess that amount is being VAT due from him for that period and notify it to him accordingly.”
“93. It is a well-established principle following Van Boeckel1 that an assessment is made to best judgement if HMRC “fairly consider all material placed before them and, on that material, come to a decision which is one which is reasonable and not arbitrary as to the amount of tax which is due.”
“must not act dishonestly, or vindictively or capriciously, because he must exercise judgement in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of the assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee’s circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guesswork in the matter, it must be honest guess work.”
“… any taxpayer who appeals to the tribunal takes upon himself the burden of proving the assertion he makes, namely that the assessment is wrong, because unless he proves this there is nothing on which the tribunal can find an error in the assessment. There should be no difficulty in the way of the Appellant assuming this burden. The facts and figures are known to him, and if he does not understand the Commissioners’ case, the rules provide for the Commissioners to give a proper explanation.””
“It is right, in my judgment, to strike two cautionary notes at this stage. There is a well-recognised need for caution in permitting challenges to findings of fact on the ground that they raise this kind of question of law. That is well seen in arbitration cases and in many others. It is all too easy for a so-called question of law to become no more than a disguised attack on findings of fact which must be accepted by the courts. As this case demonstrates, it is all too easy for the appeals procedure to the High Court to be misused in this way. Secondly, the nature of the factual inquiry which an appellate court can and does undertake in a proper case is essentially different from the decision-making process which is undertaken by the tribunal of fact. The question is not, has the party upon whom rests the burden of proof established on the balance of probabilities the facts upon which he relies, but, was there evidence before the tribunal which was sufficient to support the finding which it made? In other words, was the finding one which the tribunal was entitled to make? Clearly, if there was no evidence, or the evidence was to the contrary effect, the tribunal was not so entitled.”
“... for a question of law to arise in the circumstances, the appellant must first identify the finding which is challenged; secondly, show that it is significant in relation to the conclusion; thirdly, identify the evidence, if any, which was relevant to that finding; and fourthly, show that that finding, on the basis of that evidence, was one which the tribunal was not entitled to make.”
“We are grateful to [HMRC’s representative] and [Counsel for Mr Douglas] for their efforts in narrowing the issues in this appeal prior to the hearing on2 April 2019 . We were advised that following analysis of the records HMRC no longer contended that the Z readings were inaccurate or non-sequential. HMRC also accepted that the 12 test purchases carried out by HMRC were contained in the business records and were recorded in the Simplex books. The issues remaining related to the accuracy and reliability of the tills and whether the tills were operating or operated correctly in that no sales had been excluded. HMRC contend that in the absence of evidence, namely till rolls, to verify the figures recorded by the Appellant, the only option was to carry out a business economic exercise to establish using best judgement the correct amount of tax due. The Appellant contends that the records were provided and are reliable and the assessment was not made using best judgement.”
“112. In relation to the prices used in the exercise, we found that the use of information obtained during the relevant period by visits to the shops and information from an employee was wholly reasonable. The Appellant’s assertion as to the discounts applied to cigarettes was vague, unsupported by evidence and 12 inconsistent with [his employee] Mr Cornwall. Mr Cornwall’s evidence confirmed that discounts varied and that there was no set pattern. We noted that Mr Cornwall gave a higher discount figure than that applied by HMRC, however there was no evidence before us to indicate when the discounts referred to by Mr Cornwall were given and we concluded it was reasonable for the figures recorded by HMRC during the test purchases and the information from an employee which gave a lower figure to be used as they were obtained during the relevant period.” 113.In those circumstances we were satisfied that it was reasonable for HMRC to use the information obtained by visits and test purchases. We noted that officer Bebbington had considered the reasonableness of the mark-ups and taken into account adjustments for losses and transfer of stock. We rejected the Appellant’s submission that the assessment was flawed by the brand of cigarettes purchased or the time of day of the purchases; the onus rests with the Appellant to show that the assessment was flawed and there was no evidence in support of the submission. Moreover, officer Bebbington explained that the brand purchased is a factor considered by HMRC officers in test purchases and that the relevance of different dates for the test purchases was to establish pricing.”
“We considered the principles set out in the authorities cited above. We concluded that HMRC fairly considered all of the material available and in doing so, arrived at a decision which is reasonable and not arbitrary as to the amount of tax due. We had no hesitation in concluding that HMRC had not acted dishonestly, vindictively or capriciously.”
“Sequential readings were an issue; HMRC now accept they are and there is no need to look at that as they are accepted as accurate. 12 test purchases went through the books into the Simplex books and into the VAT returns – as accepted by HMRC. The issue is the accuracy of records – reliability of tills and whether they were operating correctly or not and whether there was any programming of the tills to exclude sales.”
“…We were advised that following analysis of the records HMRC no longer contended that the Z readings were inaccurate or non-sequential. HMRC also accepted that the 12 test purchases carried out by HMRC were contained in the business records and were recorded in the Simplex books. The issues remaining related to the accuracy and reliability of the tills and whether the tills were operating or operated correctly in that no sales had been excluded. HMRC contend that in the absence of evidence, namely till rolls, to verify the figures recorded by the Appellant, the only option was to carry out a business economic exercise to establish using best judgement the correct amount of tax due. The Appellant contends that 15 the records were provided and are reliable and the assessment was not made using best judgement.”
“We accepted the evidence of Mr Ryan that the Appellant had not requested the tills to be programmed so as to supress ‘voids’. However, as we have noted HMRC did not allege as part of its case that ‘voids’ had been supressed by the Appellant or an employee, indeed there was no evidence upon which such an allegation could be based. The relevance of the evidence was simply that it formed part of HMRC’s analysis of the reliability of the records and risk factors identified which affected or may have affected the reliability of the figures provided by the Appellant in support of his returns.”