B J Shere Khan Star City Limited & Anor v The Commissioners for HMRC

JudgeSHAMEEM AKHTAR
Judgment Date16 May 2025
Neutral Citation[2025] UKFTT 543 (TC)
Year2025
CourtFirst-tier Tribunal (Tax Chamber)
CounselMiss Charlotte Brown,For
Date16 May 2025
Neutral Citation: [2025] UKFTT 00543 (TC)
Case Number: TC******
FIRST-TIER TRIBUNAL
TAX CHAMBER
Centre City Tower, Birmingham
Appeal references: TC/2019/09582
TC/2019/09580
TC/2020/00888
TC/2020/00885
Suppression of profits/sales – best judgment – discovery assessment – penalties – personal
liability notice – restaurant
Heard on: 13 – 16 May 2024
Judgment date: originally issued on 18 July 2024
reissued following review on 16 May 2025
Before
TRIBUNAL JUDGE MICHAEL BLACKWELL
SHAMEEM AKHTAR
Between
B J SHERE KHAN STAR CITY LIMITED
First Appellant
MR. BABAR SADDIQ
Second Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant:Miss Charlotte Brown, instructed by AKA Accountants
For the Respondents: Mr Simon Bracegirdle, litigator of HM Revenue and Customs’
Solicitor’s Office
DECISION
INTRODUCTION
1.The Second Appellant, Mr Saddiq, was at all material times sole director and
shareholder of the First Appellant, BJ Shere Khan Star City Ltd (“BJSKSCL”).
2.It is agreed that BJSKSCL operated a restaurant trading as Shere Khan at Unit 13 of
Star City, a leisure and entertainment complex in Birmingham. It is said by HMRC, but
denied by the appellants, that BJSKSCL also operated a restaurant at Unit 1B of Star City,
trading as Oodles N’Oodles (“Oodles”).
3.The output tax element of the VAT assessment in dispute comprises of three elements:
(i) understated sales from Shere Khan; (ii) omitted sales from Oodles; and (iii) overstated
zero rated sales. The input tax element of the assessment includes payments said to be made
on a BMW 5X, certain payments for fuel and payments to Dobhai (Holdings) Ltd
(“Dobhai”), said to be made for the leasing of kitchen equipment.
4.The corporation tax (“CT”) assessments relate to what are said to be understated profits
from Shere Khanand omitted sales from Oodles.The additional sales were assessedas
extractions of funds from the company by a director, so subject to an additional CT charge on
the director’s loan account. It is agreed that no CT returns were filed by BJSKSCL in the
final two of the accounting periods in dispute.
5.A VAT assessment was originally issued on 12 June 2018, however the decision under
appeal relates to an amended assessment dated 17 July 2019, issued pursuant to s73(1) of the
Value Added Tax Act 1994 (“VATA”) for VAT Accounting Periods 01/11 to 07/14 in the
sum of £1,201,573: being for alleged underdeclared sales (£969,622) and disallowed input
VAT (£231,951). This was reduced on 11 February 2021 following ADR to £1,096,344
(£947,823 for output tax and £148,521 for input tax).
6.On 12 July 2019 HMRC issued related penalties to BJSKSCL in the sum of
£735,274.22 for periods 01/11 to 07/14, pursuant to Schedule 24 of the Finance Act 2007
(“FA 2007”). The penalties are said to be for deliberate behaviour and comprise a penalty for
alleged output tax underdeclared with a penalty percentage of 61.25%, following reductions
of 25% and a penalty relating to disallowed input VAT with a penalty percentage of 59.5%
following reductions of 30%.
7.On 11 July 2018 HMRC issued five decisions relating to BJSKSCL, upheld on review
dated27February2020,relatingtofiveCTdiscoveryassessmentsissuedpursuantto
paragraph 41 of Schedule 18 of the Finance Act 1998, covering periods 2010/2011 – 2014/15
being in the sum of £2,052,967.09 and an associated company penalty, pursuant to Schedule
24 of FA 2007, in the sum of £741,730.50 issued on 30 July 2019.
8.The quantum of the matters under appeal for BJSKSCL are summarised in the
following table:
Decision Period covered
(VAT) or year
ended (CT)
IssuedAmount (£)Varied amount
sought (£) (11
February 2021)
VAT
assessment
01/11 to 07/1417 July 20191,235,096 1,096,344
VAT penalty01/11 to 07/1412 July 2019735,274.22 668,911.57
CT Assessment30 April 201111 July 2018198,626.38 n/a
1

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