Daytona Surf Limited v Commissioners for Her Majesty's Revenue and Customs

Facts

The appellant, Daytona Surf Limited, a wholesaler of optical wear, was registered for VAT with effect from 19 August 2007. Its VAT return for the period 10/07 claimed a repayment of £15,260.18 of input tax with no output tax declared. Following a visit on 1 July 2008, HMRC disallowed three elements of the claim: £2,462.17 on invoices dated after the period end, £7,074.03 on invoices from businesses not registered for VAT (Priory Eyewear, Genesis Eyewear and Outlook Optical), and £525.00 on an invoice from an associated company, Lemon Ice. The reduced claim of £5,198.98 was repaid. The £2,462.17 and the £525.00 were later repaid in the correct period, leaving the £7,074.03 in dispute. HMRC subsequently sought evidence that the supplies underlying the repaid £5,198.98 had been paid, and, being unsatisfied, assessed for the period 04/08 under section 26A of the VAT Act 1994, initially at £4,809.00 and later reduced to £2,533.00. The company, appearing by its director Mr Booth, appealed. At a pre-hearing review on 29 June 2010 an associated appeal brought on behalf of six companies was withdrawn and Judge Demack directed amended grounds limited to the periods 10/07, 04/08 and 07/09.