Lancer Scott Limited v The Commissioners for HMRC

For the one-year assessment limit under section 73(6)(b) of the Value Added Tax Act 1994, time runs from the date when the Commissioners have actual evidence of facts sufficient, in their opinion, to justify the particular assessment. The relevant knowledge is not hypothetical or constructive knowledge. An officer’s decision that the evidence was insufficient to justify an earlier assessment may be challenged only on Wednesbury or analogous principles.

An appellate tribunal should read the lower tribunal’s decision as a whole and in the context of the evidence and submissions. Reasons need not address every argument or item of evidence if the losing party can understand why it lost. Findings of fact should not be disturbed merely because another conclusion was possible.

Lancer Scott Limited appealed, with permission, against the decision of the First-tier Tribunal released on 17 June 2024, which dismissed its appeal against VAT assessments and penalties. The assessments concerned input tax claimed on invoices issued by entities connected to Wilfred Folwell, who had been convicted of money laundering offences.

The grounds alleged inadequate reasons, irrational or unsupported factual findings concerning the invoices and the alleged fraud, and an incorrect approach to the time limit in section 73(6)(b) of the Value Added Tax Act 1994. The central questions were when the Commissioners obtained sufficient evidence to justify the assessment and whether the FTT’s reasoning and findings could properly be challenged on appeal.

1. Time limit. The appeal on ground 4 failed. Section 73(6)(b) concerns the assessment actually made, not a hypothetical assessment that HMRC might have made. The relevant knowledge is actual knowledge of evidence relating to that particular assessment, assessed by reference to the subjective opinion of the relevant HMRC official, unless that opinion was perverse or Wednesbury unreasonable. The Commissioners’ collective knowledge was the relevant statutory concept, and the FTT had applied that concept in context.
2. The FTT was entitled to find that sufficient evidence was obtained when Officer Jackson received the prosecution jury bundle on 24 April 2015. The limited taxpayer information supplied by HMRC did not, by itself, amount to sufficient evidence of facts to justify the assessment. The Appellant had not shown that the failure to assess earlier was Wednesbury unreasonable.
3. Adequacy of reasons. Ground 1 failed. Although the FTT’s structure and reasoning were imperfect, its decision had to be read as a whole and in the context of the evidence and submissions at the hearing. It sufficiently explained why the Appellant lost. A tribunal need not address every argument, evidential detail or peripheral point.
4. Findings of fact. Grounds 2 and 3 failed. The appeal tribunal’s task was to ask whether the FTT was entitled to reach its findings on the evidence, not whether it would have reached the same conclusion. The FTT was entitled to find that the majority of invoiced items were not supplied, that the evidence supported a fraudulent scheme, and that the Appellant knew of the fraud. The Appellant had not established that the assessment was excessive or proved the extent of any overcharge.
5. There was no error of law in the FTT’s decision. The appeal was dismissed.

• First-tier Tribunal: The FTT dismissed the Appellant’s appeal against the VAT assessments and penalties in its decision released on 17 June 2024.
• Upper Tribunal (Tax and Chancery Chamber): The appeal against the FTT decision was dismissed. The Upper Tribunal held that there was no error of law.