Judgment summary
This appeal concerned claims made by Mustafa Barak, trading as Moulin Rouge Fish and Chips, under the Eat Out to Help Out Scheme (EOHOS) in August 2020 (paras 3-4). HMRC paid the claims but later assessed to recover the full amount claimed, £19,500, following an investigation (para 5).
The Tribunal heard oral evidence from the Appellant and from HMRC Officer Rachael Moss, both of whom were cross-examined (para 8). The Tribunal found Officer Moss honest and credible and largely unchallenged, and found the Appellant generally honest but unable to provide sufficient evidence to establish his actual liability (para 8).
The Tribunal held that HMRC had made a valid assessment and that the so-called 'Officer Conditions' were satisfied (paras 39-44). HMRC accepted during the hearing that the Appellant had in fact been operating the scheme and had therefore been overcharged to some extent (para 45), but the Tribunal found that the Appellant had not shown, on any sensible or rational basis, how much he had been overcharged (para 60). The appeal was dismissed and the Assessment stood good (paras 60-61).
Background
The Appellant ran Moulin Rouge Fish and Chips as a sole trader, providing takeaway and eat-in meals (paras 18, 20). In August 2020 he was in Turkey and the business was operated by his staff (para 22).
The Appellant made four claims under EOHOS totalling £19,500, covering 2,170 diners across four periods in August 2020 (para 21).
HMRC commenced a compliance check on 20 January 2021 and corresponded extensively with the Appellant over many months, requesting records including till rolls (Z Reports), electronic sales and purchase ledgers, bank statements and sample customer receipts (paras 23-29). The Appellant provided Z Reports and bank statements but did not provide sample receipts, stating this would be too onerous (paras 27, 54).
On 10 December 2021 HMRC issued an assessment for £19,500 to recoup the entirety of the Claims, later reissued on 18 March 2022 due to referring to the wrong tax year (paras 5, 32). HMRC upheld the Assessment on review on 2 February 2023 (para 36), and the Appellant appealed to the Tribunal (para 37).
Core dispute
The dispute concerned whether HMRC had made a valid assessment under paragraph 9(1) of Schedule 16 Finance Act 2020, including whether the 'Officer Conditions' (a subjective and objectively reasonable belief that the Appellant had received payments to which he was not entitled) were satisfied (paras 11, 17).
If HMRC discharged that burden, the remaining question was whether the Appellant could show that he had been overcharged by the Assessment and, if so, by how much (paras 12, 47).
The Appellant's grounds of appeal also raised procedural complaints that the Assessment failed to give reasons or refer to evidence, and that it was unreasonable under Wednesbury principles (para 15).
Court findings
The Tribunal found that the Assessment met the relevant formalities, being made in time and properly served (para 39). It found that Officer Moss subjectively believed the Appellant had received EOHOS payments to which he was not entitled, and that this belief was objectively reasonable, given an unexplained inconsistency between the gross sales required to generate the Claims (at least £39,000, or £43,400 depending on average meal value) and the total gross sales recorded on the Z Reports of £35,353.07, which included ineligible takeaway sales (paras 40-42).
HMRC accepted during the hearing that the Appellant had genuinely been operating the scheme, meaning he had been overcharged by the Assessment to some extent (para 45). The Tribunal noted that on the Appellant's own case the Claims were overstated, since his staff had allegedly given every diner the maximum £10 discount rather than 50% of the qualifying meal value (para 46).
The Tribunal examined available records, including Z Reports, bank statements and Merchant Acquirer data, and found no documentary evidence establishing the total number of diners using the scheme discount, the total value of discounts given, or a reliable basis for reducing the Assessment (paras 49-56). No customer receipts were provided during the investigation or the appeal (para 54). The Tribunal found the Appellant had not put forward a rational method for reducing the Assessment (para 48).
The Tribunal rejected the Appellant's grounds of appeal, finding that grounds 1 to 3 were addressed in correspondence and in the decision, and that ground 4, based on Wednesbury principles, could not be considered because the Tribunal has no inherent supervisory jurisdiction, citing Hok Ltd v HMRC [2012] UKUT 363 and Abdul Noor v HMRC [2013] UKUT 71 (paras 58-59).
Outcome
The appeal was dismissed. The Tribunal held that the Appellant had not shown, on any sensible or rational basis, how much he had been overcharged by the Assessment, and therefore, pursuant to section 50(6) Taxes Management Act 1970 as applied by paragraph 9(3) Schedule 16 Finance Act 2020, the Assessment stood good (paras 47, 60-61).
Major issues / areas of contention
- Whether HMRC's assessment under paragraph 9(1) Schedule 16 Finance Act 2020 met the relevant formalities as to timing and service.
- Whether Officer Moss held a subjective belief that the Appellant had received EOHOS payments to which he was not entitled.
- Whether that belief was objectively reasonable, given the discrepancy between required qualifying sales and recorded gross sales on the Z Reports.
- Whether the Appellant had been overcharged by the Assessment, which HMRC accepted during the hearing.
- Whether the Appellant could show, on the balance of probabilities, by how much he had been overcharged.
- Whether documentary evidence (Z Reports, bank statements, Merchant Acquirer data) established the number of diners, total discounts given, or a rational basis to reduce the Assessment.
- Whether the Appellant's grounds of appeal, including a Wednesbury unreasonableness argument, could succeed before the Tribunal.