Good Choice 2016 Limited, the company behind a popular Chinese takeaway ‘Oriental China,’ and its sole director, Mrs Fang Bo Guo, found themselves in the crosshairs of HMRC. The tribunal, held in October 2023 and culminating in a damning verdict in June 2024, revealed a web of deceit involving hidden sales, undeclared purchases, and a whopping £96,356 in VAT and tax liabilities.
The Background Good Choice 2016 Limited, established in November 2016, operated a thriving Chinese takeaway business until it ceased trading in March 2020. However, what appeared to be a successful venture was, according to HMRC, a facade hiding significant tax evasion activities.
The trouble began when HMRC conducted an inspection in May 2018, where Mrs Guo was advised to maintain proper till records. However, it was discovered that the company was not retaining Z readings—an essential component for accurate sales tracking.
Further investigation by HMRC uncovered that the company had two separate accounts with its supplier, Total Asia Food Limited (TAF), but only one was declared for tax purposes. Purchases from the undeclared cash account, totalling over £20,000 between July 2017 and January 2018, were never recorded in the company’s books.
The Tribunal’s Findings The tribunal, presided over by Judge Anne Fairpo, found that Mrs Guo and her company had deliberately suppressed sales and failed to declare significant purchases. The tribunal dismissed the appeal, siding with HMRC’s assertion that the VAT assessments and penalties were made “to the best judgment,” based on the available evidence.
HMRC had used a methodical approach, applying a presumption of continuity—a principle that allowed them to infer that if sales were suppressed during a known period, it was likely the same behaviour occurred in other periods. This presumption, combined with evidence from TAF and inconsistencies in Mrs. Guo’s testimony, led to a devastating conclusion: the company had systematically evaded taxes.
Penalties and Personal Liability The tribunal upheld all penalties issued by HMRC, which amounted to £46,312.19 in VAT and £50,301.59 in corporation tax. Mrs Guo’s attempts to argue that her poor health, stress, and family issues led to the discrepancies were dismissed as unsubstantiated. The tribunal noted that the evidence provided did not support her claims of memory issues or that her health conditions were severe enough to impact her business activities.
In a particularly harsh blow, HMRC issued Personal Liability Notices (PLN) to Mrs Guo, holding her personally responsible for the company’s deliberate inaccuracies and failure to notify the correct VAT liability. This means Mrs Guo will be personally liable for the penalties, further compounding her financial woes.
Conclusion This case serves as a stark reminder of the importance of transparency and accuracy in business operations, particularly in matters of tax. The tribunal’s decision not only results in severe financial penalties for Good Choice 2016 Limited and Mrs Guo but also underscores HMRC’s commitment to cracking down on tax evasion.
As Mrs Guo faces the prospect of personal financial ruin, the case of Good Choice 2016 Limited will likely be cited as a cautionary tale for other business owners tempted to cut corners and evade tax obligations.
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