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Suppressed sales resulted in a personal liability notice

14 May 2024
Categories: Tax cases
Mauheed Johngir and Muhammed Waqas Babar (TC9120)

The taxpayers were the directors and shareholders of Two Bros Restaurant Brands Ltd which traded from 2014 to 2018 from two sites in Birmingham. The restaurants had combined covers for 250 people and employed between 60 and 70 staff.

HMRC issued a ‘best judgment’ (VATA 1994 s 73(1)) assessment for periods October 2014 to January 2018 on the basis that sales had been deliberately suppressed so output tax was underdeclared. The company went into liquidation on 16 July 2018.

HMRC also issued a penalty for ‘deliberate but not concealed behaviour’ and transferred the penalty equally between the two directors through a personal liability notice (PLN).

The assessment and penalty notice were issued on the basis that card sales between October 2014 and October 2016 exceeded the declared gross sales on VAT returns for the same period by £143 221. On the basis that significant cash sales were...

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