TC09537 - [2025] UKFTT 00597 (TC)

On 3 April 2014 Mr Whines filed a paper copy Self-Assessment tax return for the year ended 5 April 2010. He had completed that document by hand himself, and had signed to confirm that the information given on it and in supplementary pages was correct and complete to the best of his knowledge and belief.

On that return, he declared a capital gain of £66,333, minus the annual exempt amount of £10,100, giving rise to a declared net capital gain of £56,233. As the computation working sheet set out, this arose from the sale, on 6 May 2009, of one share in a company called Origin System Solutions Ltd for £120,000, minus £600 costs of sale. The declared date of 6 May 2009 was a mistake for 9 May 2009.

He also declared, on the "Employment" page, against "Pay from employment - the total from your P45 or P60 - the total before tax was taken off" from his employment with "Information Systems for Business Ltd" as £74,000, and declared that UK tax of £29,001 had been deducted.

A 'Narrative' to that return explained that the disposal of the shareholding served to reduce the Directors Loan Account, which was said to have been zero at the point of Information System's administration, which was 13 July 2009.

On 22 May 2014, HMRC's Officer Richardson, an Inspector of Taxes, opened an inquiry into the 2009/10 return.

On 31 July 2015, Officer Richardson decided to refuse the claim for Entrepreneurs Relief on the basis that it was made out of time. He also decided to assess the sum of £74,000 as a distribution on the footing that Mr Whines had failed to provide any P45s or P60s, or any bank statements, showing receipt of the £74,000 (or the net figure of £44,999), leading him to form the view that this was a sum which had been written off Mr Whines' Directors' Loan Account (DLA) and not actually received as payment. He made a Revenue amendment of plus £27,779.16 to the tax return.

In January 2016, he reconsidered his earlier decisions, but stood by them:

On 10 September 2018, Mr Whines' representative wrote to HMRC making submissions (i) that the claim to Entrepreneurs’ Relief should be allowed, on the basis that Mr Whines had in his possession a bank statement for Origin showing that it made sales of £600, and therefore (on that footing) was trading; and (ii) that Mr Whines had taken the figure of £74,000 from his P60. But neither the bank statement nor the P60 referred to were attached. It was said that he had made the claim to the relief on his (then) accountant's advice, and that therefore this had not been done carelessly.

On 27 June 2019, Mr Whines appealed HMRC's decisions by way of a Notice of Appeal. This was obviously very significantly late (3 years and 5 months late) and, ordinarily, applying the usual principles as set out by the Upper Tribunal in Martland, might have enjoyed very little prospect of being allowed to proceed. But HMRC, despite originally objecting to the late appeal, then decided to consent, on the basis that it wished to revise some of the sums calculated.

Mr Whines subsequently had his appeal struck-out, for non-compliance with case management orders of Judge Sinfield, then the Tribunal's President; but his appeal was then reinstated (by Judge Sinfield).