Tribunal Upholds Tax Assessments and Reduces Penalties in Salokun v HMRC Case

Citation: [2023] UKFTT 962 (TC)
Judgment on


The case of Sunday Salokun v The Commissioners for HMRC [2023] UKFTT 00962 (TC) represents a significant tax law decision by the First-tier Tribunal (Tax Chamber). The Tribunal, led by Judge Vimal Tilakapala and Gill Hunter, held a remote video hearing to adjudicate on the appellant Mr. Sunday Salokun’s appeal against HMRC’s decisions relating to assessments of capital gains tax and late filing penalties. This article analyses the key topics and legal principles applied during the Tribunal’s judgment.

Key Facts

Mr. Salokun was assessed for unpaid capital gains tax for tax years 2014/15 and 2015/16 and late filing penalties for tax years 2014/15, 2015/16, and 2016/17. He contended that these disposals were made under duress to fund medical expenses for his wife, following instructions from the government, and thus believed that he should be exempt from both taxation and penalties. HMRC argued that the appeals were issued within statutory deadlines and that the appellant’s behavior had been deliberate, thus penalties were justifiably raised.

Tax Assessment Validity

The Tribunal evaluated whether tax assessments for 2014/15 and 2015/16 were issued correctly under Sections 9A, 29, 34, and 36 TMA 1970. It was determined that assessments were valid as they were made following a legitimate notice of enquiry, and the behavior leading to understatement of income classified as “deliberate,” thereby meeting the pertinent criteria for time limits.

Penalty Assessments

Under Paragraphs 1, 3, 4, 4A, and 13(3) of Schedule 24 FA 2007, the Tribunal scrutinized whether penalty assessments were raised correctly. The appellant’s inaccuracies in tax returns led to an understatement of liability, which was found to be deliberate but not concealed. The Tribunal assessed that the penalties issued were within the allowable time under Paragraph 13(3).

Penalty Calculation

The applicable penalties under Paragraphs 4 and 10 of Schedule 24 FA 2007 depend on whether the disclosure was unprompted or prompted. The Tribunal noted that although initially HMRC regarded some disclosures as prompted, upon reconsideration, they were deemed unprompted, warranting a penalty reduction. HMRC recalculated and decreased penalties for the years 2015/16 and 2016/17.

Special Circumstances

The Tribunal considered the “special circumstances” for penalty reduction under Paragraph 11 of Schedule 24 FA 2007, which can be adjusted if deemed justifiable by HMRC. No “special circumstances” warranting further penalty reduction were found by HMRC or the Tribunal, per the Wednesbury reasonableness test from the Associated Provincial Picture Houses Ltd v Wednesbury Corporation case.


The Tribunal dismissed the appeals against the tax assessments for 2014/15 and 2015/16, affirming the correctness of the assessments. In terms of penalties, the Tribunal dismissed the appeal related to the 2014/15 tax year, upholding the existing assessment. However, for the tax years 2015/16 and 2016/17, the Tribunal accepted HMRC’s re-computed and reduced penalties.


The Tribunal’s meticulous application of tax law concluded that Sunday Salokun’s omission to declare gains from property disposals was deliberate, and the penalties imposed by HMRC were justified. HMRC properly adhered to relevant statutory provisions in issuing the assessments and penalties. The re-computation of the penalty charges for the years 2015/16 and 2016/17 illustrates HMRC’s discretionary power to reassess penalties and the Tribunal’s authority under s 50(6) TMA 1970 to endorse such amendments. This case exemplifies the complexities associated with capital gains tax assessments, the importance of correct filing practices, and the circumstances under which penalties can be levied and adjusted.

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