V5.253 Other credibility checks

Various investigation methods used in particular trades are discussed below. It should be noted that case law suggests, as one might imagine, that the more evidence which can be produced to support a taxpayer's records and to repudiate any credibility exercise carried out by HMRC, the more successful any defence is likely to be1.

Contract tailors

Garments are frequently made up from lengths of cloth supplied by a customer. Sufficient cloth is supplied for a specified number of garments, trimmings and wastage, but a skilled cutter can obtain more than the specified number from the cloth given him. The excess is known in the trade as 'cabbage', and becomes the property of the tailor.

When examining a contract tailor's books, it is to be expected that the assurance officer will look for sales of 'cabbage', or garments made up therefrom. An assessment may well follow if an insufficient explanation is offered for the absence of such sales2.

In Jandu3, an assessment in respect of underdeclared sales of adult clothing was based on the number of purchases of zips which were suitable, by reason of their length, only for use in such clothing (ie they could not be used to produce zero-rated children's clothing unless reduced in length, something of which the tribunal found no evidence).

Gaming machines

Gaming machine takings bear some relation to bar takings in that both reflect the number of customers making use of the facilities provided. Thus, if HMRC conduct a spot check on gaming machine

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