UKFTT 280 (2009) Ouerradi v HMRC

Closure notices and discovery assessments - HMRC won

Case Summary:

HMRC enquired into a takeaway business previously owned by Mr Ouerradi.  Information was sought, a small amount of which was provided, but most of the records, including the bank account details had been lost. HMRC therefore estimated that Mr Ouerradi had made a Gross Profit Rate of 60% which they had based on the lowest of three local adverts for fish and chip shops for sale, and issued a closure notice and discovery assessments. The taxpayer provided many reasons why a GPR of 60% was too high.

The Tribunal found that in an appeal against an amendment to a tax return giving effect to such best judgment “conclusions”, the burden of proof is on the taxpayer to establish the correct amount of tax due. In such an appeal, the officer’s conclusions “are prima facie right and remain right until the taxpayer shows that they are wrong and also shows positively what corrections should be made in order to make the assessments right or more nearly right”"

HMRC’s approach was not unreasonable and so the tax was due.