The Court of Appeal has upheld the Upper Tribunal’s decision to allow taxpayer Dhalomal Kishore to appeal against a misdeclaration penalty of £2.5m from HMRC under the now repealed section 63 of the Value Added Tax Act 1994 (VATA).

The Court ruled that the case will be remitted back to the First Tier Tribunal (FTT) so that a hearing on the issue of the penalty could be heard.

Kishore was VAT registered and made quarterly VAT returns, he then claimed repayments of input tax on his VAT returns. For his December 2005 return, HMRC delayed the payment but paid in full at the beginning of 2006.