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 case involved a taxpayer who took part in a tax avoidance scheme
in the year to April 2009. HMRC wrote to him in 2011 to say his return
was under inquiry, in a letter that used the disputed date.
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.
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.”
Given that HMRC insist taxpayers adhere to the rules, it is only reasonable to expect them to do likewise.
Tax does have to be taxing.
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