Chrisovalandis Georgiou & Anor v The Commissioners for HMRC
Decision date: 5 December 2022
Neutral citation: [2022] UKFTT 455 (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 was an appeal by Georgiou & Co Ltd and Mr Georgiou against HMRC VAT and corporation tax assessments, penalties and a Personal Liability Notice. The Tribunal found HMRC's VAT assessment was not made to the best of its judgement because of sampling, arithmetic and credibility flaws, and therefore set aside the VAT assessment, related penalties and the PLN. The Tribunal also quashed the discovery corporation tax assessments, the 2017 determination and the loans-to-participators charge because they rested on the flawed VAT figures and were not properly established.
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
A best-judgement VAT assessment under s.73 VATA must rest on representative sampling, sound arithmetic and a reality-check as to whether the assessed figure is credible and could have existed in practice; failing those elements renders the assessment invalid. A schedule 18 discovery requires the officer to form a subjective belief of insufficiency that is also objectively reasonable in light of the available material; reliance on another officer's flawed assessment is insufficient. Penalties for deliberate inaccuracy require proof of the taxpayer's actual knowledge and intention on the balance of probabilities.
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 Z readings showing daily totals can be useful for credibility checks where electronic journals are faulty, and that till faults or supplier programming errors may explain missing electronic journals. It also suggested HMRC should consider personal bank/lifestyle evidence before attributing large unexplained cash withdrawals to a director for loans-to-participators charges, and noted practical limits on information obtainable from liquidators may affect cooperation considerations.