Aftab Ahmed v The Commissioners for HMRC
[2024] UKFTT 236 (TC)
Liban Awdon v The Commissioners for HMRC
4 April 2023
[2023] UKFTT 361 (TC)
First-tier Tribunal
Mr. Awdon argued with HMRC about his tax bill. He didn't keep good records, so the tax office used what they had to calculate how much he owed. The judge decided HMRC was right, and Mr. Awdon had to pay the full amount.
Key Facts
- •Liban Awdon appealed against closure notices and discovery assessments for the tax years 2013/14 to 2017/18, totaling £25,331.19, and penalties for carelessness totaling £3,202.24.
- •Awdon's business involved buying and shipping trucks and parts to Africa.
- •Awdon's accounting practices were not in accordance with Generally Accepted Accounting Principles (GAAP).
- •Awdon provided incomplete records to HMRC, including bank statements and invoices.
- •HMRC issued closure notices and discovery assessments based on available bank statements and information from meetings with Awdon, adding a 5% uplift to account for unbanked cash.
- •Awdon argued that the assessments were too high and that he had only earned commission, not the total amounts received.
- •Awdon's bank mandates were ineffective due to signature discrepancies.
- •Awdon's explanations for cash deposits and expenses varied and were not consistently supported by evidence.
- •HMRC allowed deductions for expenses where they could be identified, but disallowed some based on Awdon's inconsistent statements and lack of receipts.
- •The Tribunal found Awdon's record-keeping careless and upheld the assessments and penalties.
Legal Principles
Discovery assessments require meeting subjective and objective tests (Anderson [2018] UKUT 159).
Anderson [2018] UKUT 159
Presumption of continuity applies if the business remains largely unchanged (Jonas v Bamford (1973-1978) 51 TC 1).
Jonas v Bamford (1973-1978) 51 TC 1
The burden of proof shifts to the appellant to demonstrate that the assessed amount is incorrect.
Not explicitly cited but implicit in the Tribunal's decision-making process.
Outcomes
Appeal dismissed.
Awdon failed to discharge the burden of proof by providing insufficient evidence to challenge HMRC's assessments and the Tribunal found his actions to be careless.
Assessments and penalties upheld in full.
HMRC's calculations were deemed reasonable given the limited information provided by Awdon, and his careless record-keeping justified the penalties.