HMRC seems to have got rather carried away with itself over calculating what an errant scaffolder (Matthew Hodges) owed it in fines and tax for undeclared VAT.
Hodges failed to declare (ie evaded) £11,000 in tax. However, HMRC accused him of evading £529,536 in VAT due on the scaffolding projects he carried out since 2006. On top of the unpaid tax, HMRC demanded £399,734 as a penalty for non-payment.
The onus of proof is of course is on the taxpayer to disprove whatever HMRC says it is owed, thus Hodges was in rather a bind.
Andrew Hubbard of Baker Tilly, is quoted by the Telegraph:
"It looks to be little more than a simple back-of-the-envelope calculation with no thought being given to the reality of how one person could have achieved a turnover of that level.Nichola Ross Martin, of Ross Martin Tax Consultancy, Mr Hodges' representative at the tribunal said:
These figures have stretched credulity to such a point that a court has to intervene and say that the tax officer hasn't used their best judgement."
This was "wholly unrealistic for such a one-man operation,"Judge John Brooks, of the tax tribunal, agreed.
There would not be sufficient days in the year to erect and dismantle enough scaffolding to achieve such a return."
"For Mr Hodges to have generated such additional turnover he would either have had double the amount charged to his customers or increased his work force."HMRC later admitted its own calculations of more than £500,000 in unpaid VAT were "unrefined".
Tax does have to be taxing.
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