Passion Incorporated Limited v The Commissioners for HMRC
Decision date: 5 February 2024
Neutral citation: [2024] UKFTT 122 (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
Passion Incorporated Ltd appealed HMRC decisions disallowing input VAT for multiple periods and a best judgment VAT assessment for 10/19. The Tribunal found the company failed to show with sufficiently detailed evidence that the expenditures giving rise to input VAT were incurred for the purposes of its business and upheld HMRC's disallowances and the best judgment assessment, with a minor agreed correction increasing one refund by £47.83. The appeal was dismissed.
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: high
The Tribunal applied and affirmed the principle that a taxable person must provide sufficiently detailed records to demonstrate a direct and immediate link between input-taxed expenditure and the making of taxable supplies; generic or bare descriptions and unsupported assertions do not discharge the burden. The Tribunal also upheld that HMRC may make a best judgment assessment where returns appear incorrect and there is sufficient material to support a reasonable, non‑arbitrary figure, and the taxpayer must show such an assessment is excessive.
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 indicated that data‑protection objections to disclosure of supporting evidence require specific explanation and cannot be treated as a blanket reason to withhold documents, and that redaction may address concerns. It also noted that HMRC's prior discretionary acceptance of invoices in earlier periods does not bind it to repeat the same exercise of discretion in later periods.