Divisia v The Revenue & Customs (whether assessment made to HMRC's best judgement - withdrawal of taxpayer's authorisation to use flat rate scheme) [2023] UKFTT 543 (TC) (22 June 2023)

Divisia v The Revenue & Customs (whether assessment made to HMRC's best judgement - withdrawal of taxpayer's authorisation to use flat rate scheme) [2023] UKFTT 543 (TC) (22 June 2023)

HMRC's VAT assessment was made to the best of their judgment based on material provided by PAD, and PAD failed to show the calculation was incorrect. However, HMRC could not reasonably have been satisfied that there were grounds to withdraw PAD's authorisation to use the Flat Rate Scheme, as there was no abuse or risk to the revenue justifying such action, especially given PAD's cessation of trading and inability to recover French VAT.

Citation
[2023] UKFTT 543
Parties
Appellant: Pierre Andre Divisia; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
22 June 2023
Procedural Posture
VAT Assessment Appeal / First Tier Tribunal (tax Chamber) Decision on Papers
Outcome
Appeal allowed in part
Legal Topics
Value Added Tax, Flat Rate Scheme, Best Judgment Assessment, Withdrawal of Authorisation, Tribunal Appeal
Tax Law Value Added Tax Flat Rate Scheme Best Judgment Assessment Withdrawal of Authorisation Tribunal Appeal

Case Brief

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Parties

Pierre Andre Divisia

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

VAT Assessment Appeal / First Tier Tribunal (tax Chamber) Decision on Papers

Legal Issues

  1. 1 Whether HMRC's VAT assessment was made to best judgment under section 73(1) VATA 1994
  2. 2 Whether HMRC could reasonably have been satisfied that there were grounds to withdraw the taxpayer's authorisation to use the Flat Rate Scheme under regulation 55P VAT Regulations 1995

Ratio Decidendi

HMRC's VAT assessment was made to the best of their judgment based on material provided by PAD, and PAD failed to show the calculation was incorrect. However, HMRC could not reasonably have been satisfied that there were grounds to withdraw PAD's authorisation to use the Flat Rate Scheme, as there was no abuse or risk to the revenue justifying such action, especially given PAD's cessation of trading and inability to recover French VAT.

Court Disposition

Appeal allowed in part

Orders

  • Assessment to be reduced to reflect outputs as determined by HMRC but calculated using the applicable Flat Rate Scheme rate(s)
  • Parties to agree the amount, with liberty to revert to the tribunal if unable to agree