Universal Flooring Limited appealed to the tribunal against a VAT penalty issued by HMRC totalling £90,753.

On 20 March 2018, HMRC issued a penalty notice to the company and director Mark Mackley under section 60 of Value Added Tax Act 1994 (VAT Act 1994).

The penalty was issued on the basis that Universal Flooring had failed to submit VAT returns for a six-year period between 2010 and 2016 and as a result the tax authority issued estimated assessments every quarter.

Universal Flooring paid the majority of these assessments, but it turned out that they significantly understated the actual VAT due by £371,729.

HMRC argued that this was the VAT which the company had evaded and that as a director, Mackley had deliberately failed to submit VAT returns for that period as he knew that it would have resulted in much greater liability to VAT for the company.