Soleimani Mafi TC 0451  – Penalties
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.
George – 0509  – Entrepreneurs’ relief
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.
Pensioner jailed for VAT repayment fraud
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….
McFarlane  TC 06512 – Tax Tribunal case lost for deliberate behaviour
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.
Code of Practice 9 tax investigation closed
This client came to us from London after he was referred to our firm by his accountants. This Code of Practice 9 ( COP 9 ) tax investigation case was being dealt with by a forensic accountant in Wales who decided to close his business and do a runner after taking a large fee upfront. The case involved undisclosed income from various sources over 13 years and involved complex transactions. Our team of tax experts took on the case and after thoroughly investigating the facts and meeting with HMRC officers, were able to reach a settlement that was acceptable to our client and HMRC. The case was closed and our client thanked us for our efforts to bring his life back to normal.
Our analysis: Code of practice 8 and code of practice 9 tax investigation cases are very complex. With Code of Practice 9 cases, there is immunity for making a full disclosure. If however, the tax payer does not make a full disclosure, there is a risk of prosecution by HMRC. There have been numerous cases of tax payer being sentenced to prison for not making a full disclosure during the Code of Practice 9 enquiry. Our team of tax specialists have extensive experience in dealing with Code of Practice 8 and Code of Practice 9 investigations and negotiating best possible settlements for the clients.
Man jailed after failing to comply with Code of Practice 9 investigation
Bartley Murphy from Demesne Road, Downpatrick, has been sentenced to prison for 2 years and three months for tax fraud. Mr. Murphy developed and sold several houses between 2007 and 2014 but did not declare his profits to HMRC or paid any tax. He was offered Contractual Disclosure Facility under Code of Practice 9 by HMRC to make a full disclosure of his tax irregularities. However, despite being under a serious tax investigation Mr. Murphy chose to lie and did not make a full disclosure. Read more.
Galiara  TC 06431
The First Tier Tribunal has decided in favour of the appellant appeal against late filing penalties issued by HMRC. The Tribunal Judge found that HMRC had not been able to provide sufficient evidence that a notice to deliver a tax return had been sent to the tax payer. This case demonstrates that HMRC’s penalty system is not always right and that if appealed correctly, penalties issued wrongly can be cancelled.