H & H Contract Scaffolding Ltd v The Commissioners for HMRC
[2024] UKFTT 151 (TC)
Bakery Badjie v The Commissioners for HMRC
14 June 2023
[2023] UKFTT 537 (TC)
First-tier Tribunal
Mr. Badjie claimed big business expenses without receipts. He said his accountant handled it, but the judge said he should have known better. He even called to ask about his refund! The judge sided with the tax office and Mr. Badjie has to pay the penalties.
Key Facts
- •Mr. Badjie appealed against penalties (£1,952.94 total) for inaccurate expense claims (2016-2020 tax years).
- •Closure notices were not appealed, only the penalties.
- •Mr. Badjie claimed significant business travel and other expenses without supporting documentation.
- •HMRC disallowed all expense claims, resulting in closure notices and penalties.
- •Mr. Badjie claimed he relied on his accountant and lacked knowledge of the claims.
- •Mr. Badjie made multiple calls to HMRC inquiring about his delayed tax refund.
- •Mr. Badjie admitted to providing his accountant with expense information without receipts.
Legal Principles
A penalty is payable if an inaccuracy in a document given to HMRC is due to a failure to take reasonable care.
Schedule 24, Finance Act 2007
The standard for reasonable care is that of a prudent and reasonable taxpayer.
David Collis v HMRC [2011] UKFTT 588 (TC)
Taxpayers cannot escape personal responsibility for returns by relying on a specialist unless highly specialized advice is required.
Stewarton Polo Club v HMRC [2011] UKFTT 668 (TC)
To succeed with a defense based on reliance on a professional advisor, the taxpayer must show that they sought help from a qualified professional, properly instructed, and checked the advice received.
Alexander Ayers v HMRC [2016] UKFTT 0190 (TC)
Outcomes
Appeal dismissed.
Mr. Badjie failed to demonstrate reasonable care; he knew about the large expense claims and anticipated a refund despite lacking supporting documentation. His reliance on his accountant was insufficient given the substantial nature of the claims and his lack of oversight.