This is the third time this appeal has been before the Judges with the Appellants losing most of their points at the First and Upper Tax Tribunals. It has been, and remains, a difficult case for the layperson to follow what all the fuss is about. The point at issue is whether a panel sided vehicle was a van or a car. The employees worked for Coca Cola. The Judges decided that all three vehicles were cars. Car Benefit in Kind tax charges are usually a lot higher than van Benefit charges, hence the problem. Companies should take advice if there is any doubt about a vehicle. Will this appeal go to the Supreme Court?
This was an appeal against an FTT decision. Jones’ termination payment from her employment was under investigation and appeal. The UTT decided differently to the First Tier, and said that HMRC had failed to prove the culpability of Jones and hadn’t established carelessness or deliberate conduct. Therefore the Discovery Assessments should not have been issued. The UTT didn’t remit it back to the First Tier and allowed the appeal. The case confirms that HMRC has to prove culpability when issuing Discovery assessments.
The First Tier Tribunal has decided that the tax payer should have taken professional advice on tax implications resulting from a declaration of trust for the benefit of his sister. The tax payer did not disclose the sale of a property for £1.8m. HMRC raised discovery assessments outside the usual time limits. HMRC also issued penalties for deliberate and fraudulent behaviour. The First Tier accepted that there was no evidence to support the declaration of trust actually existed. The judges also concluded that the tax payer should have known that there would be tax implications of entering into such declaration of trust and therefore was liable for higher penalties under the deliberate behaviour.
Our analysis: This is an unusual decision as the judges have decided that failure to take professional advice amounted to deliberate/ fraudulent behaviour.
The appellant owned 6.9% of the ordinary share capital in a company but without right to vote. The tax payer had been promised voting rights in early 2012 but the necessary resolutions had not been passed until a year later in January 2013. The company was later bought out in August 2013. The First Tier Tribunal held that any voting rights or right to acquire voting rights owned by the appellant did not satisfy the criteria for entrepreneurs’ relief on the basis that voting rights were due to the holding of the stated shares.
An old aged builder from Somerset has been jailed after fraudulently taking almost £650,000 in VAT repayments. Derek Hoe, aged 83 years, filed fraudulent VAT repayment claims for purchase of building materials that were allegedly used to build new houses which are normally zero rated. See more….
The First Tier Tribunal judge found in this appeal that there was a valid discovery and the appellant’s actions were considered deliberate. The appellants agents FTR Accountants Company Limited had made a series of mistakes and errors in the appeal process and did even turn up to the hearing with the excuse that they had got their diaries wrong. This case demonstrates the importance of cooperating with HMRC from the outset and to ensure the formal appeal process is adhered to by the agents as any mistakes could prove to be costly.