[2024] UKUT 00436 (TCC)

nine assessments (‘Discovery Assessments’) issued by the respondents (‘HMRC’) pursuant to s 29 of the Taxes Management Act 1970 (‘TMA’) for the nine consecutive tax years from 2007-08 to 2015-16 in respect of unpaid income tax and capital gains tax. For the purposes of the appeal, the total of the nine discovery assessments stood at £67,177.01.

nine penalty assessments (the ‘Penalties’) for failure to notify the relevant tax liabilities for the said years. The penalties were raised pursuant to section 7 of TMA (for the years 2007-08 and 2008-09), and Schedule 41 to the Finance Act 2008 (‘Sch 41’) (for the years 2009-10 to 2015-16). The overall quantum of penalties for the nine years was £43,665.06.

‘74. To make his case, the appellant has produced various statements from third parties: employees at licensed bookmakers, his father, his uncle, and a plumber. Insofar as these statements pertain to gambling wins which are not to be treated as taxable, Officer Tailor has already made those adjustments in her revised calculations. These third-party statements do not assist the appellant in quantifying any further amounts that can be reduced than what Officer Tailor has already done in revising the quantum of the discovery assessments.

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Furthermore, there is the issue of reliability of the appellant as a witness. On the whole, the inconsistencies in Mr Hague’s evidence given to this Tribunal upon corroboration with his evidence given in other contexts severely undermine the reliability of Mr Hague’s evidence on the whole. The inconsistences in his evidence include:

The appellant stated to PC Picken during interview under caution that he had no

bank accounts in 2009, which was plainly false.

The appellant also stated to PC Picken that he was not married, had no children,

but in his witness statement to this Tribunal in relation to Heathcroft Crescent, he stated

that his ‘wife and kids’ lived with him at Heathcroft for some of the time.

In the December 2009 interview, the appellant stated that he had worked in a pub for his brother for 12-13 years prior. His evidence in this appeal was to say that he had only worked for the period of 2008 to mid-2011 for his father (and not for his brother).

The appellant stated to HMRC in his initial meeting that he did not live in Heathcroft Crescent. His witness statement lodged for this appeal said that he had lived in the property after the flood, and sometimes with his wife and children.

The appellant maintained that he believed any earnings from the pub would have tax deducted, but there was no evidence, such as regular payslips and annual P60s to support this belief.

To the extent that the appellant has asserted that the majority of the unexplained credits were gambling wins, due allowance has already been given to remove significant amounts of credits as non-taxable. Insofar as HMRC have treated the residual unexplained credits evidenced from bank and credit card statements as taxable income, the appellant has not proved the contrary that the residual unexplained credits were not taxable income, especially in the light of his own admission that he was due wages for the work he did at the Pub.

In any event, apart from the £39,682 that was expressly paid by the £60,000 cheque from his father, the appellant had variously stated that he received his wages in cash. It is not an unreasonable inference to draw that the appellant might not have paid all his wages received in cash into his bank accounts to be part of the unexplained credits from Officer Tailor’s analysis of his bank and card statements. In other words, it is plausible that some of the cash receipts for wages have not left any documentary trail for HMRC to identify as ‘unexplained credits’ to be included as part of the discovery assessments.

Given the foregoing, it is clear that HMRC have made ‘best judgment’ assessments based on the information made available by the appellant or gathered from other sources, while the appellant has not provided any alternative basis to reduce the assessments further or to nil. I conclude therefore that the revised quantum of discovery assessments should stand good.’