This appeal to the First-tier Tribunal concerned an assessment made under VATA 1994, s. 73(1) – Neoterick UK Ltd v HMRC  UKFTT 442 (TC).
Section 73(1) provides that, where a person has not made any returns required to be made under VATA 1994, or it appears to HMRC that such returns are incomplete or incorrect, HMRC may assess the amount of tax due from the person “to the best of their judgment”.
The company operates a Subway outlet, and HMRC conducted some test purchases. The till receipts showed that the items purchased were reported as zero-rated, when at least some of the items purchased should have been standard rated. HMRC asserted that there had been a serious understating of the VAT liability.
Various arguments were put forward in the case, but the FTT was not persuaded by any of them. The tribunal concluded that the assessment clearly met the tests that had been laid out in case law precedents, and it dismissed the appeal.