This has always angered CTM clients because it seems that HMRC can simply make up a figure, which is generally inflated, and little can be done about it, save appealing to the Tax Tribunal.

However, ‘Best Judgement’ assessments are perfectly legitimate if a business, or individual, has lost records that should legally be retained. An HMRC Officer has no other option but to look at the facts and material available and to, in effect, have a good guess at the amount of tax owed. It is often difficult to argue that the assessment is too high, when very few business records have been retained.

The Tribunal and higher appeal courts generally have little sympathy unless there are good reasons for not holding the relevant records.

That said, if a taxpayer can prove during the course of the appeal process, and with good evidence, that a ‘Best Judgement’ tax assessment is too high, the job of the Tribunal is to decide which figure is correct and will reduce the amount assessed if necessary.