Liability to register for VAT

In 2018 HMRC asked the taxpayer to ‘self invigilate’ their takings from their nail bar business for a week. However during the same week an HMRC officer clandestinely visited the salon and concluded that the taxpayer’s figures had been suppressed by 50% compared to the officers’ observations. HMRC considered the taxpayer should have registered for VAT in January 2013 and raised an assessment. The taxpayer appealed on the basis that they were trading below the threshold so had no need to register.

Further HMRC’s conclusions and calculations were flawed.

The taxpayer produced previously unseen evidence at the hearing including CCTV recordings taking by the taxpayer since the beginning of 2019 to show the trading that had taken place on the premises in particular the number of clients. There were also letters from clients about how long the treatments took along with...