The FT reports an interesting tribunal ruling in a taxpayer's favour who avoided £653K in tax.
The tribunal ruled that HMRC made a "fatal" error wrt tax dates, by describing a tax year “ending 6 April 2009”; thus invalidating the enquiry notice.
Jane Bailey, the tribunal judge, said HMRC had stated an intention “to enquire into a tax return for a year which did not exist”.
The taxpayer argued the mistake about the date was fatal to HMRC’s case, even when there could be no reasonable doubt as to which year was intended.
HMRC argued that it was clear to the taxpayer which return was under inquiry. It also said the date “was only one day out, it did not mention the wrong year”.
The tribunal said conditions for its application were not met. As a result, HMRC has run out of time to challenge the taxpayer’s 2009 tax return. He is set to pay £653,000 less than the amount claimed by HMRC if it succeeded in showing the tax avoidance scheme was ineffective.
HMRC, avoiding any mention of the fact it cocked this up, said:
“We are disappointed with the tribunal’s decision and are considering whether to appeal. HMRC wins around 80 per cent of avoidance cases that are taken to litigation by the taxpayer and many more settle with us before reaching that stage.Given that HMRC insist taxpayers adhere to the rules, it is only reasonable to expect them to do likewise.
We protected over £1bn in April this year alone. We tackle avoidance wherever we see it and litigate where necessary to ensure schemes are defeated and the tax due is paid.”
Tax does have to be taxing.
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