Qasim Latif v The Commissioners for HMRC
[2024] UKFTT 277 (TC)
Paul Brown v The Commissioners for HMRC
20 March 2024
[2024] UKFTT 245 (TC)
First-tier Tribunal
Mr. Brown didn't pay a tax called HICBC, and HMRC tried to make him pay, but they didn't follow the rules properly. The court said that Mr. Brown didn't know he had to pay the tax, so it wasn't his fault, and he didn't have to pay anything. Also, HMRC made a mistake in how much extra they wanted him to pay.
Key Facts
- •Appeal against discovery assessments for High Income Child Benefit Charge (HICBC) and penalties for the tax years 2014/15 to 2017/18.
- •Assessments issued on 23 June 2021 (HICBC) and 24 June 2021 (penalties).
- •Appellant, Paul Brown, did not file self-assessment returns.
- •Appellant argued ignorance of the law as a reasonable excuse for non-notification.
- •HMRC's statement of case incorrectly stated penalty rate at 27% instead of the correct 20%.
Legal Principles
Validity of discovery assessments under s29 Taxes Management Act 1970 (TMA).
Taxes Management Act 1970, s29
Time limits for discovery assessments under ss34 and 36 TMA.
Taxes Management Act 1970, ss34, 36
Reasonable excuse for failure to notify under s118 TMA and Schedule 41, Finance Act 2008.
Taxes Management Act 1970, s118; Schedule 41, Finance Act 2008
Retrospective effect of s97 Finance Act 2022.
Finance Act 2022, s97
Burden of proof for HMRC to demonstrate validity of assessments.
Case law (implied)
Cross-examination and challenging witness evidence.
Case law (Ives v HMRC [2023] UKFTT 968 (TC); Tui UK v Griffiths [2023] UKSC 48)
Outcomes
Appeal allowed in full.
HMRC failed to prove the validity of the HICBC assessments because there was no evidence of who made the assessment, and the assessments for 2014/15, 2015/16, and 2016/17 were made outside the time limit as Mr Brown had a reasonable excuse for not notifying his liability, and no penalties are due.