TC09512 - [2025] UKFTT 00522 (TC)

We have considered the penalty calculations. There is no dispute that the inaccuracies which are the subject of the Assessments were deliberate. To the extent of the disclosed inaccuracies there is also no dispute that they were not concealed. It is arguable that for the sums which have required adjustment that they were concealed (but that is not the basis of HMRC’s penalty assessment). The disclosures were all prompted by HMRC’s CDF letter. Nor is it disputed that the disclosures for each of the years assessed were made more than three years after the end of the tax year in question. As such the penalty range provided for under paragraph 10A of Schedule 24 Finance Act 2007 requires a range of 45% and 70% for the category 1 penalties and a range of 62.5% and 105% for category 2 penalties. Where within those ranges the penalty should be assessed depends on the quality of disclosure.

HMRC’s guidance indicates quality of disclosure will be assessed through the lenses of telling, helping, and giving. HMRC allowed mitigation of 45% in respect of the category 1 penalties for tax years 2010/11 – 2014/14, 15% for the category 1 penalty for 2009/10 and 45% for the category 2 penalty.

Mr Price described these reductions as reasonable but generous. We agree. It is plain to us that the Appellants gave the bare minimum level of co-operation. They signed a CDF which declared all the categories of income that they had failed to declare. They attended a meeting to discuss the CDF. However, it then took over 12 months for a report to be submitted, a joint report when HMRC had indicated that they wanted separate reports. HMRC were required to devote resources repeatedly in obtaining the disclosure report and information, something that really should not have been required under the CDF facility. There were inconsistences between the report narrative and the accompanying tax calculations. As we have determined the tax calculations sought to diminish the extent of the inaccuracies in an entirely unevidenced way and so understated the true liability as we have determined it. The report was purportedly based on appendices of information which have never been provided to HMRC and were not produced in these proceedings indicating to us that they may never have existed. In our view the co-operation and quality of disclosure was all but pitiful (even when NN’s periods of ill health are considered). We therefore conclude that the reductions given by HMRC were generous but we do not amend them.

For the reasons given we uphold the Assessments and Penalties but in the following varied amounts which we take from spreadsheets helpfully prepared with diligence and agility by Dr Heal; we thank him for his assistance in this regard:

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.