Steven Hague v The Commissioners for HMRC
[2024] UKFTT 139 (TC)
Stephen John Mullens v The Commissioners for HMRC
2 October 2023
[2023] UKUT 244 (TCC)
Upper Tribunal
The taxman said Mr. Mullens owed taxes on money he didn't report. A court agreed that Mr. Mullens hid the money on purpose. Mr. Mullens tried to argue they didn't prove he owed *exactly* that amount, but the court said he should have been more honest from the start, and he had to prove he was wrong, which he couldn't.
Key Facts
- •Mr. Mullens, a solicitor, received six payments totaling approximately £40 million from the Ecclestone family.
- •HMRC issued discovery assessments under s.29 of the TMA and penalty assessments under s.95 of TMA and Sch. 24 of the FA 2007.
- •The FTT found the payments were taxable income and the penalties were correctly assessed.
- •Mr. Mullens appealed, focusing on the burden of proof regarding the timeliness of assessments (ETL assessments under s.36 of TMA) and the penalty assessments.
Legal Principles
Burden of proof for discovery assessments: Generally, the taxpayer bears the burden of disproving the assessment (s.50(6) TMA). However, for ETL assessments, HMRC must prove culpable conduct (s.29(4) TMA) and that the assessment was made within the extended time limit (s.36 TMA).
Taxes Management Act 1970 (TMA), sections 29, 36, 50(6); Finance Act 2007 (FA 2007), Schedule 24; Case law (Hurley v Taylor, HMRC v Tooth)
For ETL assessments, HMRC doesn't need to prove the precise amount of tax due, only that there was a loss of tax due to culpable conduct within the extended timeframe.
Case law (Hudson v Humbles, James v Pope, Johnson v Scott, Hurley v Taylor, Hargreaves v HMRC, HMRC v Tooth)
In penalty assessments, once tax liability is established, the burden shifts to the taxpayer to show the assessment is incorrect (s.50(6) TMA).
Taxes Management Act 1970 (TMA), section 50(6)
Outcomes
Appeal dismissed.
The Upper Tribunal found the FTT correctly applied the burden of proof. HMRC successfully demonstrated culpable conduct (deliberate non-declaration of income) and the assessments were within the statutory time limits. The Tribunal's findings on tax liability were sufficient to uphold the penalty assessments, with the burden on the taxpayer to challenge the amount.