Patrick Rodney Boden & Anor v The Commissioners for HMRC
[2024] UKFTT 457 (TC)
Julian Lowe v The Commissioners for HMRC
12 September 2024
[2024] UKFTT 826 (TC)
First-tier Tribunal
Someone was assessed extra tax on expenses. The tax office couldn't prove they properly investigated, so the extra tax was cancelled.
Key Facts
- •Discovery assessments issued to the appellant for income tax years 2017/18-2020/21 totaling £13,000.
- •Assessments related to travel and subsistence expenses claimed by the appellant.
- •Appellant's accountant, Apostle, prepared the tax returns.
- •HMRC opened an enquiry into the appellant's returns on 8 February 2023.
- •Appellant spoke to HMRC officer on 15 February 2023. The conversation involved discussion of both employment and a potential new business.
- •Assessments were issued on 11 April 2023.
- •The assessing officer's witness statement was submitted but the officer did not attend the hearing.
- •No supporting documentation was provided by the appellant to HMRC or Apostle to justify the expense claims.
Legal Principles
Validity of discovery assessments under TMA 1970, s. 29.
Taxes Management Act 1970
Two-stage test for valid discovery: subjective (officer's belief) and objective (reasonableness of belief).
Jerome Anderson v HMRC [2018] UKUT 0159
Burden of proof on HMRC to demonstrate a valid discovery.
Case law and HMRC acceptance.
Witness statements are generally inadmissible without oral evidence, particularly when cross-examination is necessary.
Case law and tribunal practice.
Outcomes
Appeal allowed.
HMRC failed to prove a valid discovery was made; neither the subjective nor objective tests were met. Insufficient evidence was presented to support the assessments. The Tribunal found the HMRC's actions capricious and irrational.