TC09512 - [2025] UKFTT 00522 (TC)

In light of the limited information available it was reasonable for HMRC to conclude that the amounts of cash deposited by the Appellants in the various bank accounts was not the total cash received by them from the various income sources. The bank statements show very limited cash withdrawals were made and there is no evidence of how day to day living expenses were funded but from undeposited cash. Further asset purchases (including properties) were made without evidencing the source of funds.

Working with the terms of the disclosure report and the appendices which were provided HMRC reasonably determined to assess as commission income the cash deposits without another evidenced source.

There are missing bank statements in respect of which there is also no analysis. SACL’s records demonstrate that salaries and dividends were paid. The bank statements available indicate that bank transfers were made in respect of such payments. There is limited evidence that such payments were made in cash. It is therefore reasonable for HMRC to have concluded that amounts of salary/dividend not shown on the bank statements/analysis which was made available were nevertheless paid by bank transfer and recorded on statements not made available.

No evidence was produced to support the receipt or deposit of £10,000 in cash in respect of the sale of 5 shares purportedly in 2013.

SACL was established in 2009 and the first intake of 78 students into SAC was in February 2010. In the outline and full disclosure report recruitment income was said to have been earned from 2010. Further SA eased employment in August 2009 and NN reduced her hours of employment from January 2010. Accordingly, it was reasonable for HMRC to conclude that commission income was received in the tax year to 5 April 2010 and not only in the subsequent tax years to 5 April 2015. We consider it likely that the income in the 2009/10 tax year related to the 78 students recruited in February 2010.

The Appellants did not let a room in Flansham House. Neither the outline disclosure nor narrative in the disclosure report indicated that a room had been let prior to 2012 (the claim was only made in the tax calculations) and, in any event, no evidence has been given as to how a married couple and a lodger shared a one bedroomed flat.

There is no evidence that either the Flansham House or Brixham Street properties were furnished lets.

There was however, lettings made of Flansham House (from 2012) and Brixham Street (from 2013). Both properties have been demonstrated to have been mortgaged.

As accepted by Mr Hossin there is no evidence of any expenses having been incurred wholly and exclusively in connection with either the recruitment or property businesses.

The Appellants agreed to a CDF and, after more than 12 months, provided a disclosure report said to have been based on information set out in appendices 17 of which were not provided immediately and 13 of which were never provided.

The Appellants’ engagement required HMRC to repeatedly chase for information and documents and to wait more than 12 months for the principal disclosure report. The co-operation provided by the Appellants prompted HMRC to issue the entirely justified threat of withdrawal from the CDF which would have put the Appellants again at risk of criminal prosecution.

No income and expenditure accounts were provided in respect of any of the businesses carried on. It is not therefore reasonable to conclude that any expenditure on accountancy services was incurred and deductible.