Finola Owens v The Commissioners for HMRC
[2024] UKFTT 192 (TC)
GN Khan v The Commissioners for HMRC
9 July 2024
[2024] UKFTT 615 (TC)
First-tier Tribunal
Someone didn't pay their taxes on rental income for years. The tax office investigated. The person claimed they tried to tell the tax office earlier, which would reduce their penalties. The judge agreed they did try to tell them earlier, but only partially, reducing but not eliminating the penalties. The person had to pay the back taxes, but the penalties were slightly reduced.
Key Facts
- •Mr. G.N. Khan (Appellant) appealed income tax assessments and penalties for the tax years 2004/05 to 2012/13.
- •Assessments were discovery assessments under section 29 Taxes Management Act 1970 (TMA).
- •Penalties were under section 7 TMA (2004/05 to 2008/09) and Schedule 41 Finance Act 2008 (remaining years).
- •The appeal concerned rental income from properties, one occupied by the Appellant's brother.
- •The Appellant argued his disclosure to HMRC was unprompted, due to contact with the Let Property Campaign (LPC).
- •HMRC argued the disclosure was prompted and insufficiently detailed.
- •The Appellant's disclosure consisted of a letter dated 11 December 2013 to the LPC, received by HMRC on 16 December 2013.
Legal Principles
Validity of discovery assessments under section 29 TMA.
Taxes Management Act 1970
Calculation of penalties under section 7 TMA and Schedule 41 Finance Act 2008 for failure to notify tax liabilities.
Taxes Management Act 1970; Schedule 41 Finance Act 2008
Definition of 'prompted' and 'unprompted' disclosure under Schedule 41 Finance Act 2008.
Schedule 41 Finance Act 2008
Burden of proof rests on the Appellant to demonstrate overcharging.
Case Law (implied)
Outcomes
Income tax assessments upheld.
Appellant failed to provide sufficient evidence to disprove HMRC's calculations, particularly regarding the property occupied by his brother.
Penalty assessments amended to reflect an unprompted disclosure.
The Tribunal found that the Appellant's letter to the LPC on 11 December 2013 constituted an unprompted disclosure under Schedule 41, despite the lack of detailed information in the initial communication. The penalty reduction was adjusted accordingly from the prompted range to the unprompted range.