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Best judgment is acceptable

17 February 2012
Issue: 4342 / Categories: Tax cases , VAT
Tufail, Din, Akbar and Tufail (TC1565)

Tufail traded in partnership as a grocer from three premises. It sold a variety of items and was therefore entitled to account for VAT by using any of the retail schemes described in VAT public notices 727 and associated numbers or under any other retail scheme if it was pre-arranged and approved by HMRC.

The method used by the firm was based on ascertaining the costs of zero-rated items purchased and estimating their mark-up and then taking account of theft wastage and similar adjustments. The adjusted figure was deducted from the total sales leaving a figure for standard-rated sales.

After a visit to the business the Revenue decided the methodology used to calculate Tufail’s VAT liability was invalid.

The department conducted a mark-up exercise based on the expected selling prices of the most popular standard-rated items sold in the shops and concluded VAT had...

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