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In ERF Ltd v HMRC (Upper Tribunal – 21 May) a company (E) dismissed its managing director and its company secretary after its accountants discovered significant financial irregularities. HMRC subsequently formed the opinion that E had underdeclared VAT by more than £13m. It issued assessments under VATA 1994 s 77(4) and imposed a penalty of £2 700 000 under VATA 1994 s 60 (mitigated by 80%). E appealed contending inter alia that the penalty should be mitigated by more than 80%. The First-tier Tribunal reviewed the evidence in detail rejected this contention and upheld the penalty in principle reducing it by £36 000 and holding that there were no grounds for any further mitigation. The Upper Tribunal unanimously upheld this decision holding that the First-tier Tribunal ‘exercised its discretion in a manner which was open to it and did not err...

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