In Gareth Bertram v HMRC [2020] TC07524, the First Tier Tribunal (FTT) held that HMRC were entitled to raise a ‘best judgement’ assessment against a taxpayer. The taxpayer also qualified for VAT relief on some of his expenditure.

The FTT held that in the absence of detail as to the nature of the expenditure claimed HMRC was entitled to raise a ‘best judgement’ assessment against a taxpayer.  As a result, the extensions were treated as standard-rated and the new dwellings qualified for zero-rating.

The FTT held that Mr Bertram did qualify for VAT relief on some of his expenses relating to the conversions, at a flat rate of £1,000 per property, resulting in a reduced net output VAT liability.

Comment

‘Best judgement’ assessments are made when taxpayer does not have sufficient records to support the VAT return figures. An HMRC officer has no other option but to have 'a best guess' at the VAT due. Appeal courts generally have little sympathy in ‘best judgement’ assessments unless there are good reasons for not holding sufficient records.

Links to our guides

How to appeal an HMRC decision 
What type of decisions is appealable? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

VAT Best Judgement Assessments
What is a 'best judgement' assessment for VAT? When can HMRC raise one? What are your rights of appeal? How do you displace a best judgement assessment?.

Construction Industry VAT reverse charge: at a glance
The Construction Industry Scheme (CIS) VAT reverse charge applies to construction services from 1 October 2020.

Record-keeping & tax: what, how and until when? (subscribers)
How long do your need to keep your books and records for tax? Record keeping for income tax, VAT, corporation tax. What if you lose your records?. 

External links

Gareth Bertram v HMRC [2020] TC07524