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HMRC internal manual

Enquiry Manual

Reopening Earlier Years: Tax Cases: Bi-Flex Caribbean Ltd v The Board of Inland Revenue 63TC515

The company supplied copies of returns to the Trinidad and Tobago authorities which showed losses. The Revenue did not accept that these returns were accurate and were unable to examine the books and records which had been lost in a fire. The Revenue raised estimated assessments and the company appealed.

The Privy Council held that the assessments had been made to the best of the Board’s judgment.

It was clearly established that such assessments necessarily relied on an element of guesswork on the Board’s part as to the amount of liability. It was sufficient that the assessing officer had not acted dishonestly, vindictively, or capriciously, and had made what he honestly believed to be a fair estimate of the Company’s income. The onus was also on the Appellant to show that the assessment should be reduced or set aside.

The Company had failed to provide evidence as to items of expenditure claimed by it which affected the correctness of the cost of sales figures in its returns, and the Board had therefore been correct to substitute best of judgement assessments for those proffered by the Company.