Apricot Umbrella Limited v The Commissioners for HMRC

Facts

Apricot Umbrella Limited, incorporated on 16 June 2014, was assessed to VAT totalling £405,422 under section 73 of the Value Added Tax Act 1994 for accounting periods 08/20 to 10/22, comprising output tax of £136,330 and disallowed input tax of £269,092. HMRC had opened a VAT enquiry in July 2021 and, when sales and purchase invoices were not produced despite information notices under paragraph 1 of Schedule 36 to the Finance Act 2008 and a daily penalty notice, treated all sales carrying no VAT as taxable and disallowed all input tax. The company appealed in March 2023 in general terms. The proceedings were troubled: after non-compliance with an unless order made by Judge Perez, the appeal was struck out, and it was reinstated by Judge Bailey in a decision dated 14 August 2025 on a finely balanced application, with directions for particularised grounds. Successive accounts of the business were given — a fiduciary for a Cypriot company, an umbrella company supplying medical staff, and finally, in an email from Mr Andrew Thornhill KC dated 23 March 2026, a payment-processing business, with an acknowledgement that earlier information had been inaccurate. HMRC applied to strike the appeal out as having no reasonable prospect of success.