The retail business owner lost his appeal and now has to pay £190k. This first-tier tribunal was lost as a result of the penalties regarding filing inaccurate VAT returns. The appellant disputed a hefty VAT assessment totalling £122,665, as HMRC claims there were inaccuracies made by the appellant which resulted in over-declared input tax and under-declared output tax.
Moreover, the appellant was charged a personal liability notice (PLN) for over £65,000, and nearly £50,000 were in dispute. The assessments raised against the appellant’s firm, in which he was the only sole trader, by HMRC were due to the inaccuracies present in VAT returns.
During the appeal, it was certain that the appellant allegedly sold his firm for £25,000. The same man who bought the company, was appointed director of the appellant’s retail business after he resigned. Companies House records and the companies’ finances made HMRC doubtful that there was indeed a new owner to the appellant’s businesses. As HMRC continued to investigate, it kept raising more queries and became even more certain that Mr S (the new owner) didn’t even exist! And that the appellant kept providing inaccurate information to the tax office.
It was concluded that the appellant had a clear history of failure to submit accurate and timely VAT returns to HMRC. Additionally, as it turned out, despite his resignation from the main company, and selling his other company, evidence showed that he was still the mastermind behind all the decisions of the company. Not to mention the deliberate and consistent inaccuracy of his company’s VAT returns.
No matter what type of business you own, you need a professional accountant by your side. You need someone who understands HMRC’s guidelines, makes sure that you are compliant and never misses a deadline. Missing deadlines and providing inaccurate information, as you can see from this case, triggers HMRC to perform an expensive, lengthy and stressful tax investigation.