Cheon Fat Limited v The Commissioners for HMRC
Decision date: 29 February 2024
Neutral citation: [2024] UKFTT 180 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
Cheon Fat Ltd appealed HMRC assessments for VAT, corporation tax and penalties after covert visits and review of records; the Tribunal found that takings had been suppressed throughout the periods for which return data existed and that the suppression was deliberate. Because original Worldpay source data was missing, the Tribunal assessed quantum by grossing up declared cash to assume cash represented 35% of takings, reducing HMRC’s assessments to an additional VAT liability of £76,626 across 18 periods. The Tribunal allowed the appeal in part by quashing one discovery assessment and associated penalty for APE 31/03/17, and ordered recalculation of remaining VAT, CT and penalties to reflect its findings.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
Where merchant-acquirer source data is absent but other contemporaneous evidence demonstrates a consistent pattern of unrecorded cash takings and suppression, a tribunal may determine tax quantum by grossing up declared cash receipts using an assumed cash proportion supported by the evidence (here, 35%), rather than requiring the missing source data.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal observed that HMRC is not obliged to disclose material it does not possess, so non-production of evidence not in HMRC’s possession does not automatically attract an adverse inference; and that late, unevidenced explanations (such as assertions of employee theft raised only at hearing) are unlikely to undermine assessments without supporting evidence or contemporaneous reporting.