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HMRC internal manual

VAT Assessments and Error Correction

HM Revenue & Customs
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Powers of assessment: Best judgement: Definition

Any assessments made must satisfy the best judgement criteria. This means that given a set of conditions or circumstances, you must take any necessary action and produce a result that is deemed to be reasonable and not arbitrary.

In other words best judgement is not the equivalent of the best result or the most favourable conclusion. It is a reasonable process by which an assessment is successfully reached.

The meaning of the phrase ‘to the best of their judgement’ and principles inherent in the Commissioners requirement to exercise best judgement were considered in a High Court ruling given by Woolf J, as he was then, in the appeal case Van Boeckel v C & E QB Dec 1980, [1981] STC 290.

The case set the benchmark for best judgement. In summary, the principles adopted in Van Boeckel are that

  • the Commissioners should not be required to do the work of the taxpayer
  • the Commissioners must perform their function honestly and above-board
  • the Commissioners should fairly consider all the material before them and on that material, come to a decision which is reasonable and not arbitrary, and
  • there must be some material before the Commissioners on which they can base their judgement.

The basic principles have been refined in a number of other cases. In the case of CA McCourtie LON/92/191 the tribunal considered the principles set out in Van Boeckel and put forward three further propositions

  • the facts should be objectively gathered and intelligently interpreted
  • the calculations should be arithmetically sound, and
  • any sampling technique should be representative.