The taxpayer complained that the assessment imposed by the Commissioners was wholly unreasonable, and void. The tribunal had found the assessment wholly unreasonable, but the High Court had allowed the Commissioners’ appeal.
Held: There was no objective standard against which an assessment, necessarily an estimate, could be made. If the officer had done his honest best, the assessment stood, but if he had not done that, the assessment would be treated as not having been made. The tribunal had erred in the test it applied.There was no finding of the absence of an honest and genuine attempt to get it right and give a reasoned assessment. The appeal failed.
The Court clarified the explanation of ‘best judgment in Rahman: ‘Another phrase (used by Woolf J in Van Boeckel) referred to the obligation of the commissioners ‘fairly (to) consider all material placed before them’. As a general proposition that is uncontroversial. However, it should not be seen as providing a separate and sufficient test of the invalidity of the assessment, not as justifying lengthy cross-examination to establish whether the relevant officers have in fact looked at all the available material. Even the term ‘wholly unreasonable’ (also used in Van Boeckel) may be misleading if it is treated as a separate test, rather than as simply an indication that there has been no ‘honest and genuine attempt’ to make a reasoned assessment.’
and: ‘The Tribunal should remember that its primary task is to find the correct amount of tax, so far as possible on the material properly available to it, the burden resting on the taxpayer. In all but very exceptional cases, that should be the focus of the hearing’
Lord Justice Chadwick Lord Justice Waller Lord Justice Carnwath
 EWCA Civ 1015, Times 02-Aug-2004,  STC 1509
England and Wales
Cited – Rahman v Commissioners of Customs and Excise CA 20-Dec-2002
The taxpayer appealed aganst rejection of his objection to an assessment to VAT . .
Cited – Rahman T/A Khayam Restaurant v Commissioner of Customs and Excise Admn 11-Jun-1998
The court described the existing practice for a tribunal to look at a challenge to an assessment to VAT which was that the Tribunal should adopt a ‘two stage approach’: ‘ the practice is to consider these cases in two stages: (1) consideration . .
Appeal from – Commissioners of H M Customs and Excise v Pegasus Birds Limited ChD 7-Nov-2003
The Commissioners appealed from a decision of the Vat and Duties Tribunal . .
Cited – Argosy Co v Inland Revenue Commissioners PC 8-Feb-1971
(Guyana) The word ‘best’ when used to refer to the judgment of a tax officer making an assessment of tax due, rather than implying a higher than normal standard, is a recognition that the result may necessarily involve an element of guesswork. It . .
Cited – Van Boeckel v Customs and Excise Commissioners 1981
The court explained the meaning of the requirement that a tax assessment made by the Commissioners should be the ‘best of their judgment’: ‘the Tribunal should not treat an assessment as invalid merely because they disagree as to how the judgment . .
Cited – Bi-Flex Caribbean Ltd v Board of Inland Revenue PC 1990
The general burden falls upon a tax payer to provide the information to allow a tax assessment to be made: ‘The element of guess-work and the almost unavoidable inaccuracy in a properly made best of judgment assessment, as the cases have . .
See Also – Pegasus Birds Ltd v Customs and Excise VDT 22-Oct-1997
The taxpayer asserted that the Commissioner’s assessment to VAT were out of time and had not been made to the inspector’s ‘best judgment’. . .
See Also – Pegasus Birds Ltd v H M Customs and Excise Admn 27-Nov-1998
The Excise Commissioners eventually issued an assessment to VAT in 1997 for 1993 after commencing their investigations in 1993.
Held: Section 73 did not operate as a full bar to the Commissioners making an assessment after the one year where . .
Cited – Pegasus Birds Ltd v Commissioners of Customs and Excise CA 10-Feb-2000
The company were said to have kept inadequate VAT Records. The parties disputed the sums due or evaded, and an assessment was only finally issued in 1997, at which point the taxpayer said that the assessment was out of time under section 73(6)(b). . .
At VDT – Pegasus Birds Ltd v Customs and Excise VDT 7-Jun-2002
The Tribunal was asked whether an assessment to VAT notified to the Respondent Company, Pegasus Birds Limited and contained in a formal notice of assessment was made to best judgment.
Held: It was not. The Respondent’s appeal succeeded. . .
Cited – Company Registrations Online Ltd v Revenue and Customs VDT 7-Aug-2008
VDT ASSESSMENT – best judgment – correctness of assessments accepted – challenge to the reasonableness of commissioners in raising an assessment – appeal dismissed. . .
Cited – Lok v Revenue and Customs FTTTx 14-Feb-2017
(Vat – Assessments : Best Judgment) VALUE ADDED TAX – Takeaway business – Assessed as liable for registration but no longer liable – Assessment raised – Whether assessment to best judgment? – Yes – Whether assessment should be adjusted? – No – . .
Cited – Volkswagen Financial Services (UK) Ltd v Revenue and Customs SC 5-Apr-2017
The court considered the VAT treatment general business overheads of a vehicle financing company, and in particular the ‘partial exemption special method’ (‘PESM’) agreed with HMRC for the valuation of the proportion of residual input tax . .
These lists may be incomplete.
Updated: 14 February 2021; Ref: scu.199570