Massala Exotic Limited & Anor v The Commissioners for HMRC

An appeal from the First-tier Tribunal to the Upper Tribunal lies only on a point of law. Permission requires a realistic prospect of success on an arguable error of law material to the outcome, or exceptionally another good reason. An appeal against a personal liability notice is determined on its merits: the tribunal asks whether the statutory conditions are met, rather than reviewing only the reasons stated in HMRC’s notice. Fresh evidence may be refused where it could have been presented below with reasonable diligence, or where its relevance and probative value cannot be assessed.

Massala Exotic Limited operated an Indian restaurant, and its director, Khosru Miah, supplied information about its takings for VAT returns. The First-tier Tribunal dismissed the company’s appeal against a VAT assessment and deliberate-behaviour penalty, and Mr Miah’s appeal against a personal liability notice making him liable for that penalty. The FTT refused permission to appeal on 30 April 2026. After refusing permission on the papers, the Upper Tribunal heard Mr Miah’s renewed application. He challenged the best-judgment assessment for later periods, the attribution of the whole penalty to him, and the FTT’s treatment of alleged duplicate turnover. He also sought to adduce fresh evidence. The issues were whether any ground disclosed an arguable error of law and whether the fresh evidence should be admitted.

1. Fresh evidence. The Upper Tribunal refused to admit Mr Miah’s proposed witness statement. He had a reasonable opportunity to give evidence to the FTT and gave no good reason for failing to do so. Although the evidence might have affected the outcome, the FTT had rejected the reliability of his account. The Tribunal also refused the application concerning HSBC statements: Mr Miah had not sought copies or disclosure before the FTT, and the statements were not available for inspection, so their relevance and evidential value could not be assessed. The applications were considered under the overriding objective in rule 2(1) and the evidence power in rule 15 of the Upper Tribunal Rules, taking account of Ladd v Marshall [22]–[26], [35]–[41].

2. Best-judgment assessment. The FTT was entitled to find that HMRC had made the assessment to best judgment. It had evidence of VAT returns and card sales for earlier periods and used the last available sales figure for later periods. Mr Miah produced no evidence to show that turnover had declined or varied after 2016. The FTT applied the correct legal approach: HMRC need not undertake exhaustive investigations, but must fairly consider the available material and make a reasonable, non-arbitrary assessment. The Upper Tribunal found no arguable error, applying the principles in Van Boeckel v Customs and Excise Commissioners [1981] AER 505 and Customs & Excise Commissioners v Pegasus Birds Ltd [2004] EWCA Civ 1015 [49]–[50].

3. Personal liability notice. An appeal against a personal liability notice under Schedule 24 to the Finance Act 2007 is a full-merits appeal. The question is whether the statutory conditions are met, not whether HMRC’s notice gave the correct justification. A different justification may be relied on at the hearing if those conditions are established. Insolvency is not a statutory prerequisite. The FTT’s findings that the deliberate inaccuracy was attributable to Mr Miah, together with the fact that the 100% attribution point was not taken before it, disclosed no arguable error [52]–[56].

4. Alleged duplicate turnover and conclusion. The FTT rejected the factual premise that the Lloyds receipts were takings of the associated companies. The appellants bore the burden of establishing that the assessment overcharged the company. In the absence of sufficient evidence linking the receipts to supplies by those companies, the FTT did not need to decide whether they had paid VAT on them. Its findings were rational and adequately reasoned, with no arguable Edwards v Bairstow error [58]–[65]. Permission to appeal was refused on all grounds [66]–[67].

1. Upper Tribunal (Tax and Chancery Chamber): Refused permission to appeal on the papers on 27 July 2026. Following an oral hearing on the renewed application on 15 September 2026, refused permission on all grounds in this decision, [2026] UKUT 355 (TCC) .
2. First-tier Tribunal (Tax Chamber): Dismissed the three appeals in a decision released on 29 January 2026 and refused permission to appeal on 30 April 2026. A citation for the FTT decision is not stated in the judgment.