Following an unannounced visit to the hotel, HM Revenue and Customs (HMRC) officers conducted an investigation and concluded that the company had failed to pay over £200,000 in VAT over a period of about 13 months. On the basis that the company’s default was deliberate, its director was issued with a personal penalty totalling over £130,000.

Challenging the latter bill before the First-tier Tribunal (FTT), the director said that he had told the hotel’s manager to register the company for VAT and was unaware during most of the period that that had not been done. The FTT, however, noted that he was in complete control of the company and that it was his responsibility to ensure that the crucial step had been taken.

It was not disputed that the company’s turnover was such that it should have been registered for VAT throughout the relevant period and the penalty had been properly calculated on the basis that its default, although not concealed, was deliberate. The director had failed to discharge the burden of proving that HMRC had overestimated the hotel’s takings during the period. His appeal was dismissed.