In M Ashraf v HMRC [2018] UKFTT 97 (22 February 2018) the FTT found that discovery assessments were not valid in the absence of an identified source of income.
In December 2012 an investigator in HMRC’s team investigating civil fraud received a report from a VAT compliance officer dealing with Zonehead a company controlled by Mr Ashraf. The report related to claims by Zonehead for input tax on imports which were not evidenced by Forms C79 a form which is issued to an importer when they pay customs duty and import VAT. As a result of this report HMRC reviewed the case for potential investigation under HMRC’s Code of Practice (COP) 9 and opened an investigation. HMRC found a shortfall between Mr Ashraf’s income and his expenditure. This led to the issue of discovery assessments under TMA 1970 s 29 for each year from 2004/05...
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