TC09550 - [2025] UKFTT 00702 (TC)

Mr Lucas is, and was in the period to which the assessments relate, a driver for the couriers UPS. A few years ago, several of his colleagues were approached by a company called Apostle Accounting Ltd (Apostle) which offered to obtain “tax rebates” relating to the cleaning of uniforms and subsistence expenses. Apostle told the drivers that they were entitled to the latter as they worked on the road and did not have access to a canteen. The colleagues successfully received payments of around £3,000 each.

Hearing about this, Mr Lucas felt he was missing out and contacted Apostle (by email as they did not answer the phone) and asked them to look into his allowances and see if he was due any reimbursement of tax. He said Apostle sent him an “application form” and said their fees would be 20% of any rebate (24% in total including VAT).

Apostle sent Mr Lucas a tax rebate claim form. He provided his address, National Insurance Number and telephone number. They did not ask for, nor did Mr Lucas provide any details of income or expenses or receipts, although they did subsequently ask for a copy of Mr Lucas’ most recent P60, which would have indicated his salary, and a copy of his passport for ID purposes.

Apostle then sent Mr Lucas a form 64-8 which authorised HMRC to communicate with Apostle as his agent. Apostle also sent him Form SA1 to register for self-assessment and obtain a tax return. Mr Lucas had, before this, been taxed only by way of PAYE and had not needed to submit a tax return. Apostle had filled in the reason why a tax return was needed which was “employment expenses over £2,500”. Mr Lucas had filled in his details and signed both forms.

On 18 August 2020 Mr Lucas sent an email to Apostle saying that he had received a letter from HMRC asking him to go online and fill in some information and asking if he should do so or leave it to them. On 21 August 2020 he sent a further email to Apostle saying “I have now received an application to fill in, is this on behalf of you or are they now sending forms to me fill in because you have contacted them”. Miss Bachleda-Baca, the HMRC officer who made the discovery, thought that the “forms” were likely to be blank self-assessment tax returns. Apostle responded on 25 August stating “I am assuming that the forms that they have sent you are to complete self-assessments? If this if the case you do not have to do anything with those as we will complete all self-assessments for you as part of the tax rebate claim process.”

At the hearing, Mr Lucas said, and we accept, that he had not understood what was meant by “self-assessments”.

There was then some delay with Apostle being authorised as Mr Lucas’ agent. Mr Lucas sent the authorisation code to Apostle on 4 November 2020. It was acknowledged on 9 November and Apostle said “Once HMRC have updated the authorisation we will progress your claim. We will email you when we have completed your calculations”.

Mr Lucas chased Apostle about the claim on 18 November 2020.

Apostle subsequently sent the “calculations” to Mr Lucas for approval. This was not in the Hearing Bundle, but we accept Mr Lucas’ evidence that Apostle sent him an email which contained a sum which Apostle told him was due to him. There was no breakdown of the amount. He was asked to approve the amount, which he did.

Apostle did not send any other documents to Mr Lucas for him to approve.

On 20 November 2020 HMRC received four tax returns for Mr Lucas for the tax years ended 5 April 2017, 2018, 2019 and 2020. They were submitted digitally by Apostle without any signature. The only items in the returns were Mr Lucas’ salary, a claim for “business travel and subsistence expenses” and a claim for £60 in respect of a “fixed deduction for expenses”. The travel and subsistence expenses varied each year and ranged between approximately £3,500 and £4,200. The fixed deduction was an allowance for laundering uniforms which is given without any need for receipts or proof of expenditure.

On 26 November 2020, Mr Lucas emailed Apostle stating, “I approved the amounts a week ago and have not had a reply?” Apostle replied on 26 November 2020: “We have submitted your file to HMRC who will process the information and then send you a notification in the post”. Mr Lucas emailed on 30 November 2020 to say he had received “the letter” from HMRC, presumably the “notification”, and asked if he needed to do anything else.

Apostle emailed Mr Lucas on 1 December 2020 to say they had received the repayment and would transfer the funds to him. Mr Lucas asked for a full breakdown of the money received from HMRC and their deductions.

Apostle replied stating:

“The claim amount was £3,086.24,

Our fee was £740.70 (20% plus VAT)

Total transferred to you was £2,345.54”

This was the only breakdown or explanation sent.

One week before the 26 November 2020 email was 19 November, one day before HMRC received the tax returns. We find, on the balance of probability, that Apostle submitted the returns immediately after Mr Lucas approved the “calculations” they had sent him.

Mr Lucas did not recall Apostle having told him that they were sending or had sent tax returns. We accept that Apostle had not sent the tax returns to Mr Lucas for approval. He had received and approved only the figures which Apostle had sent him. He did not know what they were for nor how they were calculated, only that Apostle had told him he was entitled to those amounts. Apostle had not, at least in the correspondence we saw, referred to tax returns. As noted above, they referred to “self-assesments” and said they would deal with them, but Mr Lucas did not understand that these were tax returns. The subject of the email correspondence referred throughout to “tax rebate claim”. Apostle did not, in the correspondence we saw, say they were submitting tax returns. The email for 26 November 2020 said only “we have submitted your file to HMRC…”.

We find that Mr Lucas did not approve any tax returns and that he did not know Apostle were submitting tax returns for him.

On 7 December 2021 HMRC received a tax return for the 2020/21 tax year, submitted by Apostle and claiming Travel and Subsistence Expenses of £2,615.

HMRC sent a letter to Mr Lucas on 8 February 2023 checking his tax position for the 2020/21 tax year. This was outside the normal one year “enquiry window”. The letter indicated that HMRC believed that Mr Lucas’ 2020/21 return was wrong because he had claimed job related expenses which he may not be entitled to. In response to this, Mr Lucas telephoned Miss Bachleda-Baca. Miss Bachleda-Baca asked what expenses Mr Lucas incurred at work and he said that the only expenses were for washing his uniform and for meals. Miss Bachleda-Baca explained that only £60 was allowable for laundering his uniform (a standard flat rate allowance) without proof of the actual expenses incurred and that the cost of meals was not an allowable expense. Mr Lucas did not really know what had been claimed or how much, but (in a later phone call) he accepted that he was not entitled to the deductions claimed. He considered that he was not responsible for the excessive claims, but Apostle should be responsible as they had made the claims and told him he was entitled to the rebate. Miss Bachleda-Baca also asked if the agent had requested any evidence of expenses or receipts. Apostle had not asked for any information other than that set out above.

Miss Bachleda-Baca concluded that the Agent had claimed the expenses based on, at best, a guesstimate. The expenses were, in any event, not allowable (with the exception of the flat rate uniform allowance). On this basis, she calculated the amount of tax which had wrongly been repaid for the years up to 5 April 2020 and the underpayment of tax for the year to 5 April 2021.

She accordingly concluded there was an insufficiency of tax for each of the relevant tax years and issued discovery assessments for each of the five years on 21 February 2023.

Mr Lucas sent Miss Bachleda-Baca a copy of an email chain showing correspondence between himself and Apostle which is referred to above. It also included emails following the issue of the discovery assessments. He told Apostle he expected them to deal with HMRC “as I had no idea what you were claiming for and you told me it was all things I was entitled to”. He continued “if this matter is not resolved immediately, I will pass this information over to the police and watchdog”. Apostle’s response was:

“Hi Dennis,

I will forward your comments to my solicitor and to HMRC. Please see correspondence from HMRC showing that I need to report anyone who makes allegations of fraud or insinuating this is our error and liability [the attached correspondence did not say this]. All of our claims are signed off and agreed by clients before we submit them and therefore full responsibility is taken for them.

Therefore we cannot possibly be accused of fraud, and HMRC would state that as you agreed to the claim and fraud allegation would be directed to you and not us acting on your behalf under your instruction.

The police have been informed of your threats and harassment and so has our solicitor.

So I strongly suggest that no further allegations are made.”

Mr Lucas was obviously very upset at this.

He appealed to HMRC on 3 March 2023.

Following a review, the review conclusion letter, which upheld the original decision, was sent on 29 June 2023.

Mr Lucas appealed to the Tribunal on 10 August 2023.