Key Issue: Deliberate vs. Careless Conduct in Tax Assessments: HMRC Fails to Demonstrate Deliberate Action by Taxpayer, Resulting in Invalid Assessments and Penalties.

Citation: [2023] UKFTT 993 (TC)
Judgment on


In the case of Charles Collier & Anor v The Commissioners for HMRC [2023] UKFTT 993 (TC), the UK First-tier Tribunal (Tax Chamber) was presented with an appeal concerning the late assessment of taxes and accompanying penalties. The key issue was whether the loss of tax was brought about deliberately by the appellants. The following analysis delves into the case law, scrutinizing the legal principles engaged and the Tribunal’s application thereof, linking them directly to the relevant parts of the case summary provided.

Key Facts

Charles Collier (the first appellant) and the CB Collier Partnership (the second appellant) challenged the issuance of income tax assessments under Section 29 and penalty determinations under Section 95(1)(a) Taxes Management Act 1970 (TMA 1970) and Schedule 24 Finance Act 2007 (FA 2007). The appellants contended that certain amounts were omitted from their tax returns due to negligent conduct or being brought about carelessly rather than deliberately. Consequently, they argued that the assessments and amendments, made more than six years after the relevant assessment years, were out of time and invalid. The HMRC claimed that the omissions were deliberate, thus justifying the longer 20-year assessment window under section 36(1A) TMA 1970.

The case analyzed several legal principles crucial to tax law, notably:

  1. Time Limits for Assessments: Under Sections 34 and 36 of the TMA 1970, the Tribunal considered the ordinary time limit for assessments of 4 years, an extended limit of 6 years for loss of tax due to carelessness, and a maximum of 20 years for deliberate loss of tax.

  2. Burden of Proof: The burden rested on HMRC to demonstrate that the statutory conditions for making the assessments and amendments were met, and that the loss of tax was brought about deliberately.

  3. Definition of Deliberate: The term “deliberate” as used in the statute is not explicitly defined; hence, the Tribunal drew from case law, particularly Auxilium Project Management Limited v HMRC and CPR Commercials Ltd v HMRC. The principle is that a deliberate inaccuracy occurs when a taxpayer knowingly provides HMRC with erroneous information, intending for them to rely on it as accurate.

  4. Blind-Eye Knowledge and Recklessness: Also examined was the concept of blind-eye knowledge and recklessness in terms of their correlation to deliberate action. The Tribunal looked at whether the taxpayer closed their eyes to what they suspected to be an inaccuracy, a notion linked to the legal standard of proof in civil proceedings, which is based on the balance of probabilities.


The Tribunal determined that the assessments and penalty determinations were out of time for the following reasons:

  • Standard of Proof: The Tribunal found, on a balance of probabilities, that Mr. Collier did not deliberately bring about the loss of tax. Instead, the omissions resulted from negligent conduct or were brought about carelessly.

  • No Demonstration of Deliberateness: HMRC’s contention that Mr. Collier’s previous behavior suggested a deliberate act was rejected by the Tribunal. The Tribunal did not find sufficient evidence, based on absolute or relative terms, that omissions in the tax returns were apparent to Mr. Collier or that he had blind-eye knowledge.

  • Recklessness: The Tribunal did not find Mr. Collier to have been reckless as to whether a loss of tax was brought about.

  • Time Limit Application: The Tribunal held that the correct application of the time limit in this case was 6 years, as there was a failure to demonstrate that the loss of tax was deliberate.

Therefore, both the assessments and the penalty determinations made by HMRC were declared invalid.


The Tribunal’s decision in Charles Collier & Anor v The Commissioners for HMRC [2023] UKFTT 993 (TC) reaffirms the critical distinction between careless and deliberate conduct in tax assessments. It underlines the importance of the burden of proof resting on HMRC to illustrate deliberate action on the taxpayer’s part to justify an extended assessment period. The Tribunal meticulously applied established legal principles to ascertain that the incorrect tax returns were due to negligent action instead of willful or reckless conduct, thereby rendering the tardy assessments and related penalties invalid. This case reinforces the need for precise application of tax law principles and thorough scrutiny of facts when determining the timing and validity of tax assessments and penalties.

Related Summaries