R S Garments v Revenue & Customs

VAT � misdeclaration� penalty � s 63 VATA � disallowance of input tax on Kittell basis � penalty not assessed and notified until nearly two years after Tribunal appeal against disallowance withdrawn � whether penalty assessed out of time � s 77(2) VATA allowing assessment up to two years after amount of VAT due for relevant period has been �finally determined� � whether this took place on withdrawal of appeal or at earlier time � further mitigation of penalty also sought � appeal dismissed

Simon Charles of counsel, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents

This appeal concerns a misdeclaration penalty assessed under s 63 Value Added Tax Act 1994 (�VATA�).� It is concerned in particular with the time limit applicable to the assessment of such a penalty in the particular circumstances of the case and whether, if the penalty was assessed in time, it ought to be mitigated by more than the 5% mitigation allowed by HMRC.

We received a small bundle of documents and heard oral evidence from Ragveer Singh, a partner in the appellant firm, and from Officer Piers Ginn, the HMRC officer who checked and agreed to the issue of the penalty the subject of this appeal.� We find the following facts.

The appellant firm (comprising Ragveer Singh and his mother Balbir Kaur) commenced to trade on 6 April 2007, in succession to a sole trader business previously carried on by Balbir Kaur since at least 31 May 2006.� The VAT registration number of the original business was transferred to the firm.�