Shaun Harte v The Commissioners for HMRC
[2024] UKFTT 493 (TC)
Sylvia Hook (trading as Sylmis Puppies also known as Sylml Puppies) & Anor v The Commissioners for HMRC
11 July 2023
[2023] UKFTT 618 (TC)
First-tier Tribunal
Sylvia Hook didn't report all her puppy sales. The government (HMRC) checked and found she owed more taxes. The court agreed she owed more, but not as much as the government first said. They adjusted the amount she had to pay.
Key Facts
- •Sylvia Hook (trading as Sylml and as a partner in Pinetrees) underdeclared profits for her sole trade and partnership.
- •HMRC issued closure notices, discovery assessments, and penalty notices for income tax and VAT.
- •HMRC challenged the effective date of VAT registration for both businesses.
- •Hook's accounting practices involved two businesses with overlapping sales and inadequate record-keeping (cashbooks with missing entries and invented customer names).
- •Significant cash deposits into Hook's personal accounts lacked explanation.
- •Puppy sales prices were inflated when declaring to PetPlan insurance, resulting in underreporting of income.
- •HMRC's enquiry included a sample of customer responses that corroborated PetPlan data, contradicting Hook's records.
Legal Principles
Burden of proof in appeals against discovery assessments and penalties.
Taxes Management Act 1970 (TMA)
Principles for admitting out-of-time appeals.
Martland v HMRC [2018] UKUT 178
Objectively reasonable assessments.
Taxes Management Act 1970 (TMA)
Effective Date of Registration for VAT.
Value Added Tax Act 1994 (VATA 1994)
Failure to notify penalty for VAT.
Schedule 41 Finance Act 2008
Outcomes
Appeals against closure notices, discovery assessments, and penalties partially allowed.
HMRC's discovery was valid; however, the Tribunal found that HMRC's assessment of additional sales was an overestimation. The Tribunal adjusted the assessments downwards based on their findings.
Appeal against the effective date of VAT registration for Sylml dismissed.
The Tribunal found the effective date of registration to be correct based on their findings regarding the income of Sylml.
Appeal against the effective date of VAT registration for Pinetrees partially allowed.
HMRC needs to recalculate the registration date based on the adjusted sales figures determined by the Tribunal.
Appeals against VAT penalties partially allowed.
Penalties will be recalculated based on the revised potential lost revenue (PLR) following the adjustment of sales figures.
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