Best judgement

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Best judgement
  • What is best judgement?
  • Pointers
  • Tribunal approach to appeals against best judgement
  • HMRC considerations
  • Lack of information
  • Calculating arrears
  • Invalid assessments
  • Prime assessments
  • Taxpayer appeals against best judgement

Best judgement

This guidance note provides an overview of the principles that need to be applied by HMRC when they issue assessments to VAT registered businesses. HMRC are expected to use their 'best judgement' when making a decision to raise an assessment. Please see the Assessments guidance note for more information on assessments.

What is best judgement?

The principles regarding what constitutes best judgement are taken from a High Court decision in Van Boeckel where the following benchmark was established.


  1. is not required to do the work of the taxpayer

  2. must perform its duties honestly and above board

  3. must fairly consider all material put before it and based on that material make a decision that is reasonable and not arbitrary

  4. must be in possession of some material upon which it can base their judgement

These initial principles have been further clarified in subsequent decisions and in the case CA McCourtie the tribunal laid down three further considerations:

  1. the facts must be objectively gathered and intelligently interpreted by HMRC

  2. any calculations undertaken must be arithmetically sound

  3. any sampling techniques must be representative


HMRC is expected to consider the following when issuing an assessment:

  1. HMRC must be in possession of documents / material that has been used as the basis of the assessment and it is not acceptable for the amount to be based on gut instinct or 'plucked out of thin air'

  2. the assessment must be reasonable and not arbitrary, and must be raised on a fair and reasonable basis

  3. HMRC must consider all material facts when reaching its decision and no information or material that is relevant should be disregarded

  4. calculations must be accurate and HMRC must use reasonable care when preparing calculations in order to ensure that they are accurate and fair

  5. weighting should be used wherever possible in mark up exercises

  6. if an assessment is based on one trading period, HMRC is required to ensure that the period selected is representative

  7. assessments must

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