32. Section 73(1) reads as follows:
(1) Where a person has failed to make any returns required under this Act (or under any provision repealed by this Act) or to keep any documents and afford the facilities necessary to verify such returns or where it appears to the Commissioners that such returns are incomplete or incorrect, they may assess the amount of VAT due from him to the best of their judgment and notify it to him.
33. While I am not considering the substantive appeal, the documents in front of me show that the assessment raised falls squarely within this paragraph, in particular the first clause: “Where a person has failed to make any returns required under this Act”.
34. Therefore I find that the assessment was issued under section 73(1) of VATA 1994.
35. Having established that section 83(1)(p)(i) is therefore the correct potential provision under which an appeal may be brought, I must now turn to the interpretation of it.
36. Put simply, HMRC says that it must be read as requiring returns to have been submitted before an appeal can be brought.
37. The Appellant argues instead that the words at the end of section 83(1)(p) regarding appealing against the amount of an assessment mean that no returns are required.
38. There is a further argument made by the appellant which involves a little untangling. The argument put forward (quoted verbatim in paragraph 24 above) should, I believe, refer not to VATA 1994, s 71, but rather to the opening words of VATA 1994, s 73.
39. The Appellant appears to be highlighting that assessments under section 73(1) may only be made where a person has failed to make a return. While there is no further elaboration of the point, I interpret this as suggesting an argument along the following lines: If the assessment under section 73(1) can only be made where no return has been submitted, how can section 83(1)(p)(i), which provides the appeal rights against these assessments, be predicated on the submission of the same returns.
40. As I have said, this argument is not set out in any detail in the written submissions from the Appellant, but I can see the point.
41. However, I do not agree with either of the Appellant’s submissions.
42. The words at the end of section 83(1)(p) cannot be interpreted as meaning that the amount of any assessment made under section 73(1) can be appealed. The words in sub-sections (i) and (ii) are limiting the types of assessment that can be appealed; and the words at the end allow not only the fact of the assessment being issued to be appealed, but also the amount of them. I agree with HMRC that the use of “such” in those final words is intended to refer back to those two types of assessment that fall within the provision.
43. While the Appellant has correctly identified that the assessment issued under section 73(1) is issued because there has been no return, it does not automatically follow that an appeal must lie to the Tribunal. There are a number of unappealable matters. Parliament has decided that a VAT assessment reached by HMRC on a best judgment basis can only be appealed where a return is submitted.
44. Although they are not binding on me (and were not referred to by either party), this conclusion has also been reached in two earlier FTT decisions, Yun He v HMRC [2020] UKFTT 317 (TC) at paras [2]–[3] and [28]–[31] and Withington KFC Services v HMRC [2020] UKFTT 319 (TC) at paras [120]–[126]. The conclusion in these cases was also that, where an assessment is issued because no return has been filed, there is no right of appeal unless or until a return is filed.
45. I therefore must strike out the appeal brought by Mr Oag against the VAT assessment in relation to the period 2011-2018. The assessment relating to 2005-06 remains under appeal.
46. I make one final observation. Both the original assessment letter and the review outcome letter expressly refer to Mr Oag’s right to bring an appeal to the Tribunal against the assessment. While, the contents of the letters from HMRC cannot introduce a right of appeal and it is not within the jurisdiction of this Tribunal to change HMRC’s procedure, I do observe that it is not helpful or an efficient use of resources for HMRC to send letters to taxpayers telling them that they can appeal only then to make an application to strike out the appeal that the taxpayer has, not surprisingly, then brought. I would hope that HMRC would now change their correspondence in relation to assessments raised under section 73(1) to make it clear that an appeal may only be brough if a return is submitted.
Source: bailii.org
