Gardiners of Denny Yuills of Lanark Facewear, Kirkintolloch v Commissioners for Her Majesty's Revenue and Customs
Decision date: 25 February 2011
Neutral citation: [2011] UKFTT 142 (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
This appeal concerned whether HMRC lawfully replaced the appellants' 60% exempt / 40% taxable apportionment for sales of spectacles with higher time-based percentages when issuing retrospective s.73 VAT assessments. The First-tier Tribunal found the appellants' full-cost apportionment for June 2009 did not show the returns were incorrect and that HMRC had no rational, explainable basis for the specific percentages it adopted by "best judgement." The HMRC assessments were therefore set aside.
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 a taxpayer supplies detailed full-cost apportionment information in response to an HMRC query, HMRC may not replace that apportionment under s.73 without a clear, rational basis for the alternative percentages; adopting time-based figures from limited trial data and extending them retrospectively requires adequate explanation and justification of the specific numbers used.
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 noted that informal expectations or guidance that opticians should agree apportionment methods with HMRC do not have statutory force and do not by themselves validate retrospective adjustments; and that time-based apportionment can be appropriate in some cases but must be supported by adequate records and explanation.