1. The Appellant, Mr Jarvis, has a mechanical engineering background. Through various companies, he has, for many years, carried on a business manufacturing specialist machinery for use in the construction and civil engineering industries.
2. One of these companies was GP Machinery Limited. GP Machinery had a poor VAT compliance history since it started trading in 2010.
3. Following a VAT investigation which started in November 2014, HMRC assessed GP Machinery to a VAT evasion penalty under s 60 Value Added Tax Act 1994 (VATA) totalling £284,718, being 90% of the VAT of £316,354 which HMRC believed to be due for the VAT periods 05/11 – 02/15 inclusive.
4. Mr Jarvis was the sole director and shareholder of GP Machinery. As HMRC believed that the default was due to Mr Jarvis’ dishonest conduct, they issued him with a notice under s 61 VATA in order to collect the penalty from Mr Jarvis personally.
5. Mr Jarvis now appeals against his liability to the penalty on the basis that he was not dishonest. He also appeals against the amount of the penalty on the basis that HMRC’s VAT assessments on which the penalty is based are excessive and that the 10% reduction allowed by HMRC against the maximum which could be charged does not properly reflect the level of co-operation shown by him during the course of HMRC’s investigation.
DECISION
103. Mr Jarvis’ conduct was dishonest and so HMRC are entitled to recover all or part of the penalty from him under s 61 VATA.
104. We are not persuaded on the balance of probabilities that the VAT assessments on which the penalty is based are excessive.
105. In our view a reduction of 10% in the amount of the penalty is appropriate in the circumstances.
106. This appeal is therefore dismissed and the penalty upheld.
107. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.
Source: FTT
