A Tasty Triumph

Subway franchisee’s appeal against VAT assessment is successful

The First Tier Tribunal considered whether the VAT assessments raised by HMRC in relation to a Subway franchise were excessive and unreasonable.

HMRC had based their assessments  on the fact that the standard rated sales during their selected periods of invigilation were higher than reported. The Tribunal judges concluded that there was no evidence that the standard rated sales were suppressed; that the till accurately recorded the sales; and there were a number of reasons why the standard rated sales varied over a period of time such as weather, time of the day, promotions and the fact the heating oven had been out of order on a number of occasions.

The Tribunal also noted that the times of the invigilation (mainly during lunch hours) was not a representative sample of the entire sales. The judges concluded that HMRC’s assessments were excessive and incorrect. The appeal was allowed.

Jamal Khan of Churchill Tax Investigation, which represented the appellant, said: “This is very good judgement and will help with a large number of similar cases where HMRC have used the results from invigilations to raise VAT and tax assessments. We have won a number of similar cases and reached out of court settlements.