E v The Commissioners for HMRC
[2024] UKFTT 890 (TC)
Steven Hague v The Commissioners for HMRC
19 February 2024
[2024] UKFTT 139 (TC)
First-tier Tribunal
Mr. Hague didn't pay taxes for nine years and claimed his money was from gambling. The tax office investigated, found evidence of unpaid taxes from his pub job, and imposed substantial penalties for deliberately not reporting his income. The court agreed with the tax office and said Mr. Hague had to pay.
Key Facts
- •Steven Hague (appellant) appeals against nine discovery assessments totaling £67,177.01 and nine penalty assessments totaling £43,665.06 for tax years 2007-08 to 2015-16.
- •Hague never filed tax returns.
- •Assessments were based on unexplained bank deposits, largely attributed to income from Hague's work at a pub.
- •Hague claimed the deposits were gambling winnings.
- •HMRC issued information notices, and penalties for non-compliance, with little cooperation from Hague.
- •Hague provided some information after enforcement action began.
Legal Principles
Discovery Assessments under s 29(1) TMA require both a subjective and objective test.
Jerome Anderson v R&C Comrs [2018] UKUT 159 (TCC)
Subjective test: Officer must believe information points to tax insufficiency.
Jerome Anderson v R&C Comrs [2018] UKUT 159 (TCC)
Objective test: A reasonable officer could form the same belief.
Jerome Anderson v R&C Comrs [2018] UKUT 159 (TCC)
Section 36 TMA extends time limits for assessments if tax loss was due to careless or deliberate conduct.
Taxes Management Act 1970
Section 7 TMA requires notification of tax liability; Schedule 41 FA 2008 details penalties for failure to notify.
Taxes Management Act 1970, Schedule 41 Finance Act 2008
On appeal, assessments stand unless the appellant proves overcharge (s 50(6) TMA).
Taxes Management Act 1970
The onus is on the taxpayer to rebut the presumption of continuity of income and to prove overcharge.
Jonas v Bamford (1973) 51 TC 1, Norman v Golder (1944) 26 TC 293, Haythornthwaite and Sons Ltd v Kelly (1927) 11 TC 657, Johnson v Scott [1978] STC 48, Van Boeckel v Customs and Excise Commissioners [1981] STC 290, Bi-Flex Caribbean v The Board of Inland Revenue [1990] 63 TC 515
'Blind-eye' knowledge (wilful blindness) equates to constructive knowledge, sufficient for 'deliberate' behaviour for penalty purposes.
Manifest Shipping Company v Uni-Polaris [2001] UKHL 1, Canada Square Operations Lt v Potter [2023] UKSC 41
Outcomes
Appeal dismissed.
HMRC met the subjective and objective tests for discovery assessments under s 29(1) TMA. The time limits were extended under s 36 TMA due to Hague's negligence. Hague failed to prove he was overcharged, and the penalties for deliberate failure to notify were justified.