Chee Whye Yip v The Commissioners for HMRC
[2024] UKFTT 434 (TC)
Isaac Aboagye Frempong v The Commissioners for HMRC
1 November 2024
[2024] UKFTT 999 (TC)
First-tier Tribunal
A tax accountant was accused of not declaring money he received for helping others with their taxes. The court found him guilty of deliberately hiding this extra income and upheld the tax bill, because he couldn't explain the extra money in his account. The accountant had to pay the tax and penalties.
Key Facts
- •Appeal against four discovery assessments totaling £116,070.60 for tax years 2010/11, 2011/12, 2012/13, and 2013/14.
- •HMRC alleged the appellant acted as an undeclared tax agent, receiving payments for services.
- •Appellant denied acting as a tax agent, claiming payments were 'thank you' gestures or repayments.
- •HMRC identified unexplained payments totaling £304,574 into the appellant's accounts.
- •Appellant's explanations for the payments were rejected by the Tribunal.
- •The Tribunal found the appellant acted deliberately in underreporting income.
Legal Principles
Two-stage test for discovery assessments under s29 TMA 1970: subjective belief of insufficiency and objective reasonableness of that belief.
Jerome Anderson v HMRC [UKUT] 0159 (TC)
Definition of 'deliberate inaccuracy' in tax returns: knowingly providing inaccurate information with the intention that HMRC rely on it; or recklessness as to whether it would mislead the Revenue.
Jason Andrew v HMRC [2016] UKFTT 295 (TC), Auxilium Project Management v HMRC [2016] UKFTT 0249 (TC), Salim Miah v HMRC [2016] UKFTT 644 (TC), R & C Commrs v Tooth [2021] UKSC 17
Time limit for discovery assessments under s36(1A) TMA 1970: 20 years after the end of the tax year if the inaccuracy was deliberate.
Taxes Management Act 1970
Burden of proof: HMRC must initially prove a relevant discovery; then the appellant must displace the assessed amounts.
Sections 29 and 36(1A) TMA 1970
Outcomes
Appeal dismissed.
The Tribunal found the assessments were validly raised because HMRC met the burden of proof for a discovery assessment, and the appellant's explanations for the unexplained payments were unconvincing and demonstrated deliberate inaccuracy.
Discovery assessments upheld for tax years 2010/11, 2011/12, and 2012/13.
Sufficient evidence demonstrated deliberate underreporting of income by the appellant.
Discovery assessment for tax year 2013/14 amended to exclude four payments totaling £2,110.
These payments fell outside the relevant tax year.