Isaac Aboagye Frempong v The Commissioners for HMRC
[2024] UKFTT 999 (TC)
Chee Whye Yip v The Commissioners for HMRC
23 May 2024
[2024] UKFTT 434 (TC)
First-tier Tribunal
An elderly man was assessed for unpaid taxes on a large sum of money he received from his family business. He said it was a loan repayment. The court believed the money was likely income but didn't believe he *deliberately* hid it from the taxman. Therefore, the tax bill and penalty were cancelled.
Key Facts
- •Mr. Chee Whye Yip appeals against a discovery assessment (£120,144.80) and a penalty assessment (£55,566.97) for the tax year 2012-13.
- •The assessments relate to a £250,000 payment from Archers Meat Supplies Ltd (AMSL) to Mr. Yip, which HMRC claims was undeclared income.
- •Mr. Yip claims the payment was repayment of a personal loan from a Malaysian businessman, Tony Teo.
- •Mr. Yip was 85 and suffering from chronic metastatic prostate cancer at the time of the hearing and unable to attend.
- •HMRC relied on a 20-year time limit under TMA 1970, s 36(1A) for deliberately brought about tax loss.
Legal Principles
Discovery assessment under section 29 of the Taxes Management Act 1970 (TMA 1970): An assessment can be issued if an officer discovers an insufficient assessment, and that insufficiency was brought about carelessly or deliberately.
Taxes Management Act 1970
Time limit for discovery assessments: Normally four years, extended to six years for carelessness and 20 years for deliberate actions.
TMA 1970, s 34, s 36
Deliberate inaccuracy: Requires intention to mislead the Revenue; recklessness may suffice.
HMRC v Tooth [2021] UKSC 17; CF Booth Ltd v HMRC [2022] UKUT 217 (TCC); Auxilium Project Management Limited v HMRC [2016] UKFTT 0249 (TC)
Penalties for inaccuracies in tax returns: Penalties are payable for careless or deliberate inaccuracies leading to tax understatement; amount depends on several factors.
Finance Act 2007, Schedule 24
Burden of proof: HMRC must prove the statutory conditions for a discovery assessment and penalty are met; civil standard of balance of probabilities.
Sections 29, 36 and Schedule 24
Outcomes
Appeal allowed; discovery assessment and penalty assessment discharged.
HMRC failed to prove the £250,000 payment was deliberately undeclared income. While the Tribunal found the payment likely represented income, they did not find Mr. Yip acted deliberately in omitting it. The evidence did not support HMRC’s claim of deliberate inaccuracy.